This is Why Degrees Cost a Lot and Are Worth Very Little

 

“Formal education will make you a living. Self-education will make you a fortune.”

Jim Rohn

“I’ve paid my fees and I want my degree!”

This is what a student of mine told me when I mentioned plagiarism. Yes, this student copied from sources most of their Masters dissertation and it didn’t even occur to them to argue about that. It was all about getting a degree. And this, incidentally, is worthless without the knowledge for which it is a certificate.

You see, my students want their degrees. At the same time, my students, with very few exceptions, try to get away with doing as little work towards their degree as possible.

Let’s just say that the students taking my course on enabling creativity and managing creative organisations insist that I do away with a mini project that takes them through a sequence of steps to come up and implement interesting and promising ideas.

Weird I know; I can’t figure it out either.

I can only guess that this fixation on degrees, for degrees’ sake, has to do with convincing students that they are customers.

They do pay rather large fees for their university degree. It’s reasonable to ask what they get in return.

And here is where two and two adds up to eight and a half. Many students don’t see their time at university as an opportunity to learn, learn how to learn and build contacts, they don’t understand that the fees they pay are to afford them access to educational resources (including world famous scientists and scholars). Rather they start considering the exchange they enter as one of money for a degree.

And you know what? I don’t think I blame them. After all, when you go out for dinner, you wouldn’t expect to be asked to cook your meal, would you?

Still, focusing on getting a degree, particularly when disregarding the work that goes with that, is an easy but very costly mistake to make.

Because most university degrees today cost a lot but a worth very little. This is because:

#1. There are fewer graduate jobs

You should see my students’ faces when I tell them this. Suspicion, misbelieve and disappointment fight for prominence.

Still, it is true. There are many factors that play here but the most important ones, I believe, come down to there being fewer jobs because of automation and changing economic structures, the trend towards outsourcing work rather than creating jobs (freelancing, sub-contacting etc.) and the occupation sectors that are growing. There is also the fact that there are many more graduates than there were fifty years ago.

The result is that more graduates compete for fewer graduate jobs, particularly at entry level.

For instance, the fastest growing occupation in the US in 2012 was ‘personal care aids’; for the most part this doesn’t require a university degree and pays very little (the median pay is $19,910). Add to this that UK graduates expect to apply for twenty jobs before they secure employment and you get the picture.

#2. The starting pay for graduates is decreasing

Yes; between 2007 and 2012, the average starting salary for graduates in professional employment has dropped by 11% (down to £21,701).

‘Oh’ – you may think. ‘These are all the people who do silly degrees in media studies.’

It is not so. The drop in medicine is 15%; engineering held a bit better and salaries dropped only 2% (largely because in some parts of engineering they increased).

The starting pay of graduates is also sensitive to the type of university where one did their degree. If you chose to do a degree in a post 1992 (a former polytechnic) university, for instance, your starting salary is likely to be approximately £18,000 per year; if you were amongst the selected few, on the other hand, and went to Oxbridge, you can expect to start on a salary of £25,000 (this is the average, anyway). According to the data of the study that uncovered this, the difference is still there three and a half years after the first job of graduates.

#3. The ‘graduate premium’ is a white unicorn

What is referred to as ‘graduate premium’ is the difference in life time earnings (18 years to 65 years) between graduates and people who haven’t got a university degree.

There was a time when the wisdom of getting a university degree was argued in terms of the much higher earnings of graduates. Government ministers tell us that on average men graduates earn £168,000 more than men who haven’t got a degree; women graduates earn £252,000 more than women without degree.

Sounds great, you think?

Not so fast. First, we shouldn’t forget the university fees which at the moment (mostly) stand at £9,000 per year. I reckon, to survive (eat, keep warm, have wi-fi) students need a minimum of £10,000 per year on top of that (it sounds a lot, I know; but remember only their accommodation costs over £5,000). This is £19,000 per year for three years – £57,000 for an undergraduate degree.

Next, this ‘graduate premium’ is for earning between 18 and 65 years old: this is 47 years.

Let’s see what’s happened to the ‘premium’ now. It amounts to the grand and impressive total sum of £2,361 per year; or £196 per month. And this is before tax.

Told you not to rush. Graduate women’s earnings are a different matter entirely – the big difference comes from the fact that women without degrees usually don’t earn enough to return to work after they have children. So, they have really low life time earnings.

Oh, and John tells me that this is a very dubious calculation to begin with since it relies on historical data.

#4. For many jobs you don’t need a degree

Yes. For many job, you don’t even need a degree. Even highly specialised, and highly paid ones. Here is a list of forty high paying jobs for which you don’t need an undergraduate degree.

#5. A degree gives entry but not progression

There are jobs where a university degree, or another certified course, is necessary for entry into the profession. These are the professions where certification is still important: e.g. the law, medicine, dentistry, accountancy, surveying etc.

Here, having a degree is a condition for entry but it doesn’t ensure progression: this is achieved through expanding your knowledge. In fact, offering professional courses and continuing education opportunities is a growing business in UK universities. Courses in accounting, finance and business, are particularly popular.

#6. Many university courses lag behind the demands of the economy

And this is not because academics are lazy and unwilling to change.

Many university courses are built around the understanding that students need to be taught tried and tested knowledge (in academe this is known as academically rigorous knowledge). And this may not be a bad thing – after all, our students need access to reliable knowledge.

Problem is, that this knowledge may be old; which matters when the economy is changing so fast.

Finally…

Do you believe me now that your university degree costs a lot but is worth very little?

This is not to say that education, continuous learning and updating your competences is not important. Quite the opposite, today’s network economy thrives on knowledge and flexible skills and competencies. Look at the new jobs that are created: these are mostly in sectors that cannot be automated and need human ingenuity, creativity and decision making.

I believe in university education. But if you ask me whether you/your children should do a university degree, I’d say:

• Go to university only if what you want to get out of it is knowledge and networks;
• Go to university if you intend to use your time to become educated (and learn how to keep educated); and
• Go to university only if you realise that your education doesn’t end with your degree and are prepared to learn for the rest of your life.

And going to university is not the only way, not even probably the best way, to become and stay educated. If you want to know about the value of education and how to become and keep educated, watch this space.

Do you think going to university is still worth it? Did your degree help you get the job you are doing now?