The same Georgetown center that found a $1 million premium on a bachelor’s degree recently studied unemployment by major during the recession, using data from the American Community Survey. Unsurprisingly, it found that majors closely aligned with actual occupations fare better in a difficult economy than majors in the humanities or liberal arts. For Example, over 2009–2010, the unemployment rate for a recent graduate with a nursing degree was 4 percent.The unemployment rate for a recent graduate with a degree in “Area, Ethnic, and Civilization Studies” was 10. 1 percent. The same principle applies to expected earnings. A liberal arts graduate can expect to earn just $31,000 on average on entering the job market; a journalism (!) Major, just $33,000. Meanwhile, a computer science major can expect to earn $46,000; an engineering major, $55,000. It’s about employability and earning potential. If we’re really in the middle of a jobless recovery, and facing the prospect of persistent high unemployment, people thinking about college as an investment have to consider both. It might make sense for a nursing student to go into hock for a couple hundred grand, but the same move by a medievalist is dubious at best.

Looping this kind of information into the student loan process—be it run by the government or the private sector—is the key to an efficiently functioning market and to a safe deflation of the bubble.