Educational negative equity?

Most of us working in universities have seen, over the last couple of years, a significant increase in demand for student places. This is natural enough during a time of recession, when governments are anxious to move people, and young people in particular, out of unemployment, and when people are in any case anxious to maximise their opportunities by securing the best possible qualifications.

But how useful are those qualifications? According to some theories, this will depend in particular on how much it has cost you to get them. If you have had to pay a high tuition fee, and if the salary that the degree secures for you is not high enough, then the debts you may have incurred could overwhelm your capacity to repay. This phenomenon has become known as the ‘education bubble’, where an increasing number of graduates fail to pay back their loans. Depending on who carries the risk of default, the resulting burden may either affect the graduate or the state; but either way, the expected social and economic benefit of higher education is called into question. It is a phenomenon not totally unlike the growth of negative equity in property markets.

Just as public neglect of the emerging property bubble produced ultimate disaster, so a temptation to ignore the education bubble could have dramatic consequences for universities. The issues raised by the education bubble include the methods and levels of university funding, the optimum levels of participation in higher education, and planning for learning methods and the reform of pedagogy. If there is indeed an education bubble, then it may call into question most of the public policy assumptions that have governed higher education strategy over recent years. That would be a chilling thought.

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4 Comments on “Educational negative equity?”

  1. anna notaro Says:

    Interesting interview to the UK education minister on the BBC Today programme this morning on the issue whether university admissions should be liberalised
    http://news.bbc.co.uk/today/hi/today/newsid_9481000/9481294.stm
    following The Guardian’s report of proposals under consideration which could allow UK students to enrol in university of their choice as long as they pay vastly higher fees up front http://www.guardian.co.uk/education/2011/may/09/universities-extra-places-richest-students

  2. Perry Share Says:

    This is what happens when the outcomes of tertiary education are construed in purely economic terms. When housing shifted in meaning from a place of shelter to an opportunity to get rich quick, we saw what happened. If education is purely about financial returns, a similar pattern will emerge.

    But education can help people to develop the capacities to make an enhanced contribution to society and culture on a much broader level, and this needs to be emphasised. Utopian and unrealistic, perhaps, but what is the alternative?

  3. Ros Says:

    This post ties in very nicely with your article in the Irish Times today. Please come home Ferdinand! We really need you here!!

  4. Al Says:

    The negative equity comes from a prior inflation.
    Debt comes from an inflated sense of cost.
    It is the inflated notions of quality that should concern us most…


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