IN CONSIDERING higher education, you have to be careful when you try to decide what is waste and what is not. The American educational system is grounded in the notion that the society has an interest in broadening the horizons of its youth beyond the strict necessity of vocational competence. When, however, you find--as the General Accounting Office recently did--that large amounts of taxpayer money are being used to teach "coed jogging," archery and disco dance--or to nurture a student through his 18th try at passing physical education--you might fairly conclude that some boundary of legitimate purpose had been transgressed.

In the 20 institutions that the GAO studied, the agency found a disturbing pattern of low grades and poor attendance among students receiving aid and of lax monitoring by schools. The GAO does not claim that its sample is directly representative of the entire higher education establishment. It would be surprising, however, if the practices the agency found were not fairly widespread.

Post-secondary education boomed during the last decade. The college-age population grew rapidly, and a far higher proportion of high school graduates sought further education. This is a healthy trend, but it brought with it a considerable lowering of academic standards. New institutions sprang up to take advantage of greatly expanded federal aid. Many older institutions--their endowments eroded by inflation and a generally poor investment climate --were also forced into the competition for student dollars. Federal aid was also important bait for recruiting minority students, to meet affirmative action goals and timetables.

This tended to reverse the old school-student relationship. Schools used to set standards and dismiss students who failed to measure up. Now the students could set the standards, and if the schools failed to comply, the student could take his valued business to a more amenable competitor.

This undermining of standards may well accelerate as the schools enter a period of declining enrollments. Strengthened requirements for academic progress might help, but this is not an area where federal regulation can be relied on to prevent abuse. Tighter income eligibility standards are not a good idea--too many eager and able students at middle- income levels are already unable to afford the advanced education that the country needs them to have. Correction must come from the schools themselves. To compete for the ever scarcer federal dollar, the higher education establishment must show that it can set and enforce reasonable standards of academic achievement--even if that means fewer students, fewer departments and fewer teachers.