THE ONLY COUNTERTREND TO THE DEFLATIONARY EPOCH:

There is a great deal of justifiable outrage about crushing college loans that aren't worth the cost. These cases usually involve under-qualified and ill-informed students borrowing massive amounts of money to go to bad private colleges. Sometimes they drop out; other times, their college of choice doesn't give them what they need for their desired career. The real problem is almost always that they didn't have the advice they needed. Students who don't qualify for lots of financial aid should choose non-residential public institutions, and our country is full of decent ones. It is an abuse of the marketplace when the admissions representatives of expensive private colleges convince them otherwise. Those representatives are driven, of course, by the imperatives of the marketplace, and they are doing what's required to keep their schools in business. The student is a scarce resource, and there are more private residential colleges than we can really use.

It is a disservice to students to allow those schools to prop themselves up indefinitely on loans guaranteed by the government; the education they offer is not worth the burden of a five- or six-figure student loan. If the marketplace weren't distorted in such a seductive way, young people would typically make safer and better choices. Colleges are failing young people by offering them choices they're not really competent to make.

Many of the criticisms of higher education in America today are related to a national crisis in competence or, more precisely, a competence gap. Some Americans -- members of our cognitive elite -- seem in some ways more competent than ever. The best secondary schools are better than ever, and their graduates are often so well prepared that they could go to Ivy-League colleges and slouch through with minimal effort in grade-inflated, politically correct humanities courses and still be perfectly ready for the more cognitive parts of the workforce. And employers know that the SAT scores and fabulous résumés of teenage accomplishment that got them into their elite colleges are typically evidence enough that they have the brains and skills to learn on the job. Still, few question whether the Ivies and the other elite schools are worth the money, for a couple of reasons. For one thing, their huge endowments allow them to offer most students steep discounts. For another, there is little doubt (less, actually, than there should be) that their degrees -- as well as the contacts students make on their campuses -- are a reliable ticket to lucrative employment.

Elite schools aren't completely immune to competition. They don't have to worry about filling their desks with warm bodies, but their "brand" depends on getting the students with the best measurable credentials. One way the Ivies and other elite schools secure their students' highly marketable brand of excellence is through shameless grade inflation. The typical grade is some form of an A.

A few years ago, Princeton attempted to buck this trend and develop a reputation for rigor by enacting grading reform that reduced the number of As to around 35%. It seemed to be a brilliant move: Princeton could boast that it was a little bit more demanding, and its students would have the benefit of having the reputation of surviving the "tough" Ivy. But the reform backfired: The admissions folks at the other Ivies started to warn the best and the brightest that they might be tarred with the stigma of Bs if they went to Princeton, and Princeton started to struggle in the competitive marketplace. So Princeton rather quickly caved, and has since gone the other direction. The administration recently announced that it may well do away with or radically deemphasize grades, at least for freshmen, as a way to reduce student stress.

Grade inflation is a sensitive subject among Ivy-League students. They argue that they are exceptionally good students and so deserve exceptionally high grades. Few of the highly competent people at such schools want to be rigorously compared with one another; the result might be an unfair reputation for mediocrity. In the end, despite or because of the well-known grade inflation, graduates can still enter the global competitive marketplace quite successfully with the impression of excellence maintained.

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