Posted tagged ‘education bubble’

Is a university education losing its value?

October 16, 2011

Have we come to a higher education turning point? Are we entering a phase of history in which a university degree is going to be seen as a waste of time, effort and money?

Why am I asking? Well, for much of the period since the Second World War a key consensus in most of the world has been the belief in the value and efficacy of education, including higher education. Accompanying this consensus has been a commitment to increasing the proportion of the population to benefit from a university degree, to the point where everybody, regardless of background, means, gender or ethnic origin, would be entitled to enter higher education provided only that they had the ability and talent.

However, this consensus has come under pressure, as a growing number of people question the case for it. Partly this has been prompted by talk of an ‘education bubble’ (the notion that the personal cost of higher education is not recovered during the subsequent career facilitated by it).

Yesterday’s Observer newspaper carried a personal statement by columnist Philippa Young in which she explained why she abandoned an Oxford MSc programme after just one week, having concluded that it would not provide her with any benefits. Perhaps the two reasons that should concern us most in her reasoning are that universities are obsessed with formal tradition at the expense of pedagogy, and that they lack a capacity for cross-disciplinary intellectual inquiry.

Maybe one might want to argue that these problems are specific to Oxford. But we may now be coming to a phase in which more generally the growing loss of confidence in the ‘respectable’ institutions of society is also infecting attitudes to universities. In part this may be due to a lack of understanding as to what universities are for, and what those who enter them should expect to get from them.

Not everyone hoping for a fulfilling life and a successful career needs to go to university. Equally not everyone studying for a degree will need to be doing so for the same reason. Even within Oxford University not every programme will have the same objectives. The academy is now much more diverse than it was in the past. But this needs to be explained and understood much better. It is time to re-establish a social contract between society and its universities. Without it we may find a growing consensus supporting the idea of an education bubble. And we cannot afford that.


Assessing the value of education

July 27, 2011

Recently I had an interesting conversation with a young student currently studying at an English university. Two years away from completing his undergraduate studies, he told me that he intended to travel the world and then settle down to a job that would have to pay less than £21,000 – permanently. He did not wish ever to cross the salary threshold at which he would have to repay his student loans. And why? Because once he allowed himself to be sucked into the game ‘in which my salary would have to chase my debts’ he would be in ‘negative educational equity’. He had no intention of going there.

While there may not be too many people planning their careers quite like this, the student’s assessment is not wholly out of line with what some commentators are saying, particularly in the United States. In a recent blog post Professor Mark J. Perry of the University of Michigan looked at the relative rates of inflation of property prices, consumer prices and higher education tuition fees in the United States. He found that since 1980 tuition fees had risen more than twice as fast as house prices. And yet, the inflation in real estate, as we know, created the property bubble and its horrendous economic effects. The question  he asks is whether the ‘education bubble’ is also about to hurst, creating a fresh set of very serious problems. This could happen where those in the education system are no longer convinced that the debts they take on in order to acquire a degree are greater than the financial benefits of being a graduate.

There are of course differences between the funding and costs of a university education in America and one on this side of the Atlantic; indeed in these islands the position varies between different countries. But as the costs rise – whether these are borne by the taxpayer or by the student or in some other way – some may ask whether there is an adequate repayment for the investment. Where this is asked more generally by society it can be answered in terms of the capacity of higher education to provide relevant skills and a civilising influence; where it is asked by individual fee-payers the answer sought is about the return on investment in terms of career development and salary.

If we slip into a situation where students walk away from higher education opportunities because they are not convinced they will provide an adequate return, then as a society we will be in trouble. If there is even a hint of a risk of this we need to look closely at our higher education strategy. The time to do that is now.

Educational negative equity?

May 10, 2011

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.