This Stones article and the book mentioned yesterday really provide a foundation to understand the crisis we are experiencing in education. While it is tempting to blame the Fed government (and that expansive institution certainly has contributed mightly to the current debacle in education) the answer lies in the emergence of a set of informal institutions (conventions, norms and beliefs) that are now prevalent in US society - education is a right for all and as a right must be insured by the state. So, the Fed government is merely responding to this informal institution - this conviction on the part of most.
The Stone article is a very nice review of the impact of blanket subsidy for higher education by the US government. While this surprises no economist, it is interesting that the general public, holding to the emergent view of education as a right, is blinded to the social cost of this subsidy. A conservative pundit used the phase civil rights industry to inflame those who were convinced that egalitarianism (equality of outcome) is a right. Matt Taibbi, uses the term education industry in his Stone piece. It is really the iron triangle (to borrow from Ike and McCain) of schools - financial institutions and the state that has created a mediocre, high cost, wealth inhibiting system that is characterized by rent seeking. Not that young people and their families are victims, they are willingly blind participants in this process. The data and analysis about cost of college, income generated by major, and the real cost of borrowing - is not obscure or difficult to locate.