A Harvard study has found clear evidence that for a large portion of students, going to college may actually damage their ability to adjust to adulthood. It's as if it's a bad thing for young people to be put into a setting where they don't belong (35-40% need remedial classes) where the liquor flows freely, the classmates are loose, and actual requirements of classwork don't kick them out for a few years--all at the cost of tens of thousands of dollars of student loans and a lack of work experience.
That said, given the cash cow that remedial lecture/recitation and video classes (the worst way to teach anything, IMO) are for colleges and universities, don't expect them to lead the way in getting rid of students who simply don't have what it takes. Probably the quickest way of achieving real reform would be simply to tell students that if they don't get at least a combined score of 1000 on the verbal/math portions of the SAT, there will be no student loans backed by the government for them.
Not that Congress can be expected to do this, of course, but if by some miracle they did, we could expect two wonderful side effects. First of all, high schools would suddenly be able to tell kids that there are very real consequences for not learning to read, write, and cipher. Second, the pathetic state of modern colleges of education would be made very clear, as there are few areas of modern universities which would be hit harder by minimum SAT score requirements than the College of Education.
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