This article summarizes the findings of this study, also discussed here. Much of the decline from 1992 to 2003 is likely due to immigration, but there are still some startling findings about higher education, discernible in these tables (numbers 11 and 12). Note that in 2003 17% of college graduates scored at basic or below in prose literacy, while only 31% scored as proficient, a 9 point decline since 1992. Also in 2003, 11% of those possessing graduate degrees scored at basic or below, while only 41% scored proficient, a 10 point decline since the last survey. These standards are not high: "proficient" is defined as the capacity to "compar[e] viewpoints in two editorials"; basic literacy requires the ability to read a pamphlet, below basic the capacity to sign a form. As Mark S. Schneider, Commissioner of Education Statistics, put it, "Whats disturbing is that the assessment is not designed to test your understanding of Proust, but to test your ability to read labels."
Let me repeat: less than half of those with graduate degrees can read (and presumably think) well enough to compare two newspaper editorials. What say you, dear readers?