To the extent that it's only a signaling mechanism, though, it doesn't make sense to subsidize it. Encouraging everyone to go to college with the state paying h

To the extent that it's only a signaling mechanism, though, it doesn't make sense to subsidize it. Encouraging everyone to go to college with the state paying half their tuition doesn't confer any benefit on the public. It just appears to because it's inflating a common metric of intelligence, thus providing impetus for further subsidy, and so on. It's as if the government noticed that people with large diamonds are happier, healthier, and smarter than people without (which they probably are), so they started subsidizing diamond mines for the good of the public. It might be advantageous for any given peacock to have a bigger, flashier, and more cumbersome tail than the next peacock, but the arms race makes it ever more certain that the peacocks will go extinct if a new predator shows up. Money that's spent on escalating signals is money that could be spent on other things, and once the public cost becomes high enough that people get disgusted and stop respecting the signal (e.g., large SUVs) its value plummets. I don't think college is at the breaking point just yet, and it might still be rational to get that generic bachelor's. But if tuition continues to rise at its current rate, which greatly outpaces inflation, there will come a day when the bubble bursts.