Now, U.S. President Barack Obama proposes to forgive more student debt and that will make a bad situation worse.
More than half of recent graduates are working as waiters, taxi drivers or some other occupation that doesn't require a college education. The number in minimum-wage jobs has doubled since 2007.
Slow growth and a tough jobs market is one reason but as importantly, too few college students choose tough majors like nursing, engineering and accounting that enjoy a robust demand for graduates. Too many select easier subjects like politics, history and other liberal arts and emerge with few practical skills.
Good jobs abound for technicians in healthcare, computers and other fields -- often educated at community colleges -- and the U.S. Labor Department finds most rapidly growing occupations don't require a bachelor's degree. However, parents fear their children, without a four-year diploma, will lack the flexibility to navigate a lifetime of changing conditions.
If students are lazy and parents risk adverse, university professors and presidents are worse.
Professors simply teach less and engage in more research of questionable value than in the past. In the 1950s and 1960s, a significant track record of publications wasn't required for tenure for most undergraduate faculty -- advancing the frontiers of science and the arts was mostly the work of professors engaged in post-graduate education.
Nowadays, professors at all levels must publish to win tenure but much of what they do adds little value to either the practical world or the advancement of knowledge in a purer sense -- but requires lighter teaching loads to enable.
Once tenured, many don't publish much but still keep their light teaching schedules.
University bureaucracies are even worse -- presidents and deans often have staffs bigger than chief executive officer and managers running much larger businesses. And faculties, which make virtually all decisions by consensus, spend endless hours in committees advising presidents and deans and are supported by mind-numbing bureaucracies, too.
University presidents are politicians, not business managers. They understand who makes the choices -- students, who pay the bills -- parents, and who they must please in the Alice-in-Wonderland world of university governance -- faculty.
Rational they are -- instead of encouraging students to study useful subjects and containing sky-rocketing costs, they focus on fund raising and lobbying government officials to facilitate more student loans.
Tuition jets into the stratosphere, students amass huge debt and universities produce a lot of high quality unemployment.
Obama is rational too -- parents, students and former students all vote.
Instead of radically refocusing national policy on skills acquisition through a dramatic expansion of vocational education in high schools and community colleges, he promises to increase the percentage of Americans with four-year diplomas.
Now he proposes forgiving billions in student debt with federal dollars. Borrowers in the program would make payments equal to 10 percent of their monthly income, after rent and basic living expenses, and after 20-years of on-time payments be forgiven of all debt -- regardless of how much they had borrowed.
Debt forgiveness simply encourages young people and parents to continue poor choices and borrow too much and colleges to push up tuition -- things the nation can't afford. It certainly won't help graduates find jobs.
To compete in the global economy and create good jobs at home, the United States needs workers with the right skills. That means limiting access to college to those who can genuinely profit from a university education, requiring professors to teach more and teach more that is useful, and redirecting more of what the nation spends on education into other channels of vocational training.
(Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. Follow him on Twitter: @pmorici1)
(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)