Does State Spending on Higher Education Slow Economic Growth?

While reading this Associated Press report (pointed out to me by the But I Did Everything Right blog), I came across the following profound material:

Ohio University economics professor Richard Vedder [author of Going Broke by Degree: Why College Costs Too Much] blames the cultural notion of "credential inflation" for the stream of unqualified students into four-year colleges. His research has found that the number of new jobs requiring college degrees is less than number of college graduates.

Vedder's work also yielded something surprising: The more money states spend on higher education, the less the economy grows — the reverse of long-held assumptions.

If what Vedder says is true, then his study would be absolutely profound.  It makes intuitive sense that wasting a huge amount of resources on education that does not have economic value for society--educating more people than there are jobs for them in the fields for which they are training--would slow economic growth in some sort of way.  However, that is all just theory and conjecture on my part.  It would be great to have a formal academic study demonstrating this.  It's too bad that it would be drowned out by all of the propaganda from the higher education industry, the media, other pundits, and our politicians.

You can listen to an NPR clip where Vedder is interviewed, here:

Is a College Education Worth the Debt?