The title is blatantly stolen from Instapundit
I have commented on the idea of a higher education bubble before, unlike Instapundit I don't believe there is a higher education bubble - I believe there is a bubble in specific fields of study (i.e Lawyers, MBAs, and some (many) of the social sciences), but there is a shortage in others such as engineering and that the educational system will need to be retooled to address them.
This is happening. Apart from for-profit schools and schools such as Western Governors University, The New York Times points out today (link later) a new set of collaborative universities that are beginning to develop. Courses are being developed in conjunction with and at the request of students. Personally I think this is a good direction to be moving in.
The next step should be the elimination of traditional degrees in favor of Educational Competencies, i.e. instead of having a degree in business you would have a competency in retail management. Strings of competencies could be strung together into a meta-grouping of some sort, and not just classwork should count. Field experience should be quantified and noted also by eikther the educational institution or some sort of professional organization (although that runs the risk of "guilds" developing ala Heinlein's "Starman Jones").
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4 T-Shirts, Gloves, Skull Coffee Cup, and a Knife.