Last month Times Higher Education (THE) published its rankings of the 200 best universities internationally.  Ever inundated with U.S. News rankings, many Americans are unaware of the international rankings.

Several observations about THE rankings:

• They favor British institutions with four of the top ten institutions located in the United Kingdom, which shouldn’t be a surprise given the source of the rankings.
• They favor research universities.  Of the 54 American institutions on the list, all are research universities and none is a small liberal arts college.
• They favor institutions with significant numbers of faculty from other countries, something that, in my humble opinion, helped my education not one jot as I struggled to understand what many of them were saying.

The interesting news this year: the slip in American universities’ rankings.  The drop is due in part to major international investment in building first-class research universities, particularly in Asia.  Some experts predict the downward trend will continue, in part because the United States will have less money to invest in higher education as it struggles to pay down its mounting debt.

Needless to say, no West Virginia institution made the international 200.

Higher education endowment fund managers have not been the only people gambling with students’ futures.  So have investors for some Section 529 College Savings Plans.

Several weeks ago, the U.S. Treasury Department issued a report on 529 plans in which it disclosed that such plans had lost about $25 billion.    How much is that?  Well, to put that amount in perspective, it’s a lot more than the $16.4 billion the United States spends annually on the nation’s largest financial aid program: the Pell grant program.

Why all the losses?  Fund managers were investing in some of the same kinds of investments in which higher education endowment fund managers were investing.  If you think the endowment fund investment strategy was crazy, consider how crazy it is to place money you know you’re going to need in just a few years in high-risk investments.  It’s no different than placing your retirement savings in high-risk investments right before you retire, something any credible financial advisor would tell you not to do.

For a masterful undressing of 529 plans and their investment strategies, please read a commentary by Kevin Carey, policy director with Education Sector, in The Chronicle of Higher Education last May.

As tax-free 529 plans primarily benefit the rich, this is a case where the rich have gotten not richer, but poorer.

Yesterday, the House of Representatives passed a bill that addresses several higher education issues, including importantly overhauling our student loan system.

Shhh!  Don’t tell anybody involved in the health care reform debate, but the House chose the public option – cutting out the private insurance company lender middle man in favor of providing health care coverage student loans directly to America’s citizens students – and saving an estimated $80 billion over ten years.

In commenting on the legislation, New York Times columnist Gail Collins said something very important about higher education finance yesterday:

The central problem with financing higher education is that tuition keeps running ahead of the rate of inflation like Secretariat closing in the Belmont. The assumption that kids can just pay the bill with borrowed money has to be one of the reasons schools aren’t feeling more pressure to control costs.

I have been threatening to expose the higher education finance emperor’s lack of clothing besides a big fat purse for a while.  It’s coming – just like additional government regulation of higher education finance unless it changes its ways.