Degrees are shrinking in value but all anyone talks about is cost

Dani Bolt September 28, 2016 0
Degrees are shrinking in value but all anyone talks about is cost

Students protesting against fee rises in line with inflation should actually be more concerned about the shrinking value of their degrees. Increasing numbers of students are exiting university and entering jobs they could just as easily have obtained without a degree. This renders many complaints about fee growth irrelevant since graduates’ earnings often mean that they are unlikely to ever pay off sums anywhere near their accumulated debts.

The government is developing a system in which well-performing universities are able to increase their fees in line with inflation. Despite students’ claims that such changes are unfathomable, it is clear that they were both inevitable and necessary for students to be able to enjoy the same quality of education from year to year. Students currently pay £9000 per year for the privilege of a university education. If inflation were on target each year at 2%, it would take around twenty years for this amount to fall in value by a third.

Expecting universities to maintain a good level of education with plummeting income from students seems far more unfathomable than tying university fees to inflation. Given that inflation in the cost of providing a university education currently sits well above the headline rate of inflation, tying fees to this latter figure will still encourage increased efficiency of provision whilst enabling universities a chance at maintaining quality levels.

Whilst the anger of students who are facing fee hikes and believed themselves to have signed contracts stipulating fees of £9000 per year is understandable, the outrage of those yet to start university is not. Nobody is forced to go to university. Those who go choose to do so because they believe that the value to them of attending university exceeds the costs. Though the university fees increasing in line with inflation should not have any bearing on the intrinsic value of a university degree, those who believe that it does, to the extent that the benefits of university fail to outweigh the costs, can simply choose not to go.

What should be of far more concern to current and prospective students is the falling value of having a degree. Work by Bryan Caplan suggests that much of the financial benefit accruing to graduates is the result of the signalling effects of their degrees rather than the skills they learnt during their degree per se. Whilst many find their time at university to be the best years of their lives, it seems a shame that the skills acquired during the process constitute so little of the financial value of having a degree. University certainly shouldn’t be all work and no play, but when students report that the work is barely harder than A–Levels, there is clearly an issue.

Indeed, many institutions have seen a trend shifting away from teaching students the valuable skill of how to think for themselves towards encouraging students to develop their ability to rote learn answers to questions. Something is amiss when students are complaining about exams containing questions on topics they’ve covered but of types they have not encountered before. In many jobs in the real world workers come across challenges, the likes of which they have never experienced before. Being able to problem–solve in such a situation is far more useful than being able to recite past answers to past paper questions.

One major complaint of those protesting against nominal fee rises is that they discourage those from poorer backgrounds from applying for university educations. This is both factually dubious and reliant on significant misunderstandings of how university debt works. In 2015, the BBC reported that more disadvantaged students were entering university than had entered when fees were lower. University education is actually becoming more accessible despite fee increases. This apparent reversal of logic can be easily explained by both increased access efforts of university admissions teams and the fee system itself, amongst other factors. Pretty much everyone embarking on a degree will leave university with a large lump of debt.

The amount of debt each student accrues (excluding maintenance costs) is not dependent on their parents’ income but upon their university of choice and length of degree. The amount of debt each student pays off is dependent on their future incomes alone. Poorer students should be no more sensitive to fee changes than their richer counterparts. The fear of high levels of debt may be greater for those from a poorer background, but the nature of the fee system makes this fear somewhat irrational – the debt is only repaid by those earning above a particular level, making it very different from “normal” debt. Fears about nominal fee hikes reducing social mobility are unfounded and should therefore not be used as an argument against them.

University fees are not Freddos rocketing to ridiculous levels; they are rising in line with inflation in the same way that all other goods and services in the world are. If universities are to be able to provide education of a consistent quality then they must continue to receive fees of a constant real value, and that means increasing them in line with inflation. Students protesting against the increasing of fees as such are fighting a losing battle – in vain.

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