1.) Government-backed Loans
In an effort to make college affordable, the federal government allows students to get an unlimited amount of government-guaranteed loans (that neither bankruptcy nor even death can absolve), allowing students easy financing to even the most expensive of colleges. Assuming, “I’ll pay this back when I’m rich and famous,” an overwhelming number of students have financed themselves into a degree and overwhelming debt. Because the loan is on the student’s head and not the school’s, institutions have acted on (even if they do not actively realize) the fact that students can generate infinite money through federal loans, and do not have the foresight to understand when education is simply not worth that much — which, sadly, it never will be.
2.) Labor Market Saturation
As financing a degree became easier, more degrees entered the job market. Because academia could, by and large, care less about networking, graduates take their degrees increasingly to the bottom rungs of employment anyway, particularly if they have no idea how to job-hunt. If an employer is swamped with 20 degrees for a single position at Starbucks, will they take the degree or the high school student? So, to get above the undergrads, students go to grad school, and the saturation continues: if an employer gets 20 grad degrees for an entry-level position, will they take the grad or the undergrad? Thus, as more people go to school, school becomes more valuable even as those jobs become neither more complex nor more rewarding.
3.) Importance of Certification
If what is most valuable about a college education is the degree itself (signalling dedication and intelligence) rather than the education itself (which actually instills dedication and intelligence) then universities and colleges have an incentive to provide degrees as easily and cheaply as possible while still being accredited and reputable. Again, whether schools realize they are acting on this incentive, it is present, and it is affecting behavior.