Education: Cracker Jack Box University in serious trouble?

I'm not sure how frequent the use of bogus degrees occurs, but probably much more than I'm wanting to imagine. Anyway, the Department of Education has compiled a list of accredited institutions for employers, and the FTC is providing tips for spotting these ringers. Surprisingly, though, "diploma mills" are legal--I did not know that. For example, I could probably get a degree from "Harverd University" for an easy payment of $499.95 and still be within the bounds of the law.

According to congressional testimony, more than 200 diploma mills operating in the United States or foreign countries rake in at least $200 million a year from selling bogus degrees.

Diploma mills have become increasingly savvy at posing as legitimate schools, creating Web sites and providing fake transcripts for their "alumni." They often use names similar to those of accredited schools and offer degrees largely based on a person's "life experience." Some simply sell degrees for a flat fee.

Imagine (just for fun) if a very large percentage of the labor force actually acquired employment by means of the cereal box degree. We would tend to see rising real wages and falling productivity, although by looking at data (% of workforce holding a degree) we'd expect productivity to rise. In fact, it would be to employment what the Dot.com bubble was to the stock market. The strange thing is that, in the very short run, this might bolster the economy. Real GDP could catch up with and surpass potential because of increased income and falling productivity. Of course, this would soon reverse itself since a bunch of comic book collectors would be holding down high skill positions. I think something can be said about nepotism creating a similar effect, and it probably happens much more often.