You are going to read an article about education economics. For each question, choose the answer which you think fits best according to the text.
University education may be a waste of time and money for many
There are two main parts to the government’s higher education policy—to get people to pay more of the costs of their university education, and to get more people to go there. New figures suggest that the second part of the policy may be undermining the first.
Behind the government’s conviction that people should borrow money to cover the costs of their higher education and pay it back when they are gainfully employed is the assumption that graduates earn much more than non-graduates. But the latest edition of an annual survey by High Fliers Research, a consultancy, of 15,000 students graduating this summer from the country’s top 30 universities, shows that starting salaries, having risen for the past decade, are now falling. The typical starting salary expected has dropped from £18,700 in 2002 to £18,500 ($31,000) this year. That is barely above the £15,000 minimum for repaying a student loan. Confidence in finding a job is also lower. Whereas 42% of finalists in 2000 expected a “proper” (ie, graduate) job on graduation, the proportion has fallen steadily since then, to 37% now.
That chimes with some more data, this time from the government’s own Higher Education Statistics Agency, which has been following the fortunes of 242,500 graduates from 2002. More than a third of those either could not find a job at all, or had to settle for a low-skilled one, such as sales assistant or clerk. Furthermore, a new survey of 2,000 students and graduates by doctorjob.com, a recruitment website, showed a quarter thought their degree had not equipped them for the job market. Some 40% thought their degree was more or less a waste of time, money and effort.
Most ominous of all is some startling recent research in Labour Market Trends, a government publication, looking at the variation in earnings of students who left school with good examination results (meaning two or more A-levels). Those with degrees in subjects like law, maths and economics can expect earnings around 25% higher than average. But returns on other subjects are sharply lower. Social studies brings a 10% premium. Education and languages may have returns close to zero. On average, arts degrees show a negative return. In other words, those graduates earned less than if they hadn’t done their degree at all.
It may be that demand for graduates has slumped temporarily because the economy slowed a couple of years ago. In the past, financial returns to higher education overall have been very high in Britain; the government also likes to point to international studies that link extra years spent in education to higher economic growth.
But it seems likely that government policy, which has pushed up the proportion of youngsters going to university by nearly a quarter over the past ten years, and plans to increase it from its current 43% to 50% by 2010, has also had an effect. By all accounts, the quality of university education has fallen as the government has pushed more youngsters through the system without a commensurate increase in funding. And the price of most things tends to fall as quantity increases. It would be surprising if that did not apply to graduates.
At present, students leave university with debts of around £12,000. If the government succeeds in pushing higher tuition fees through Parliament, that could rise to £27,000. But if returns to higher education go on falling as the price rises, will people want more of it or less?
At present, they seem to want more. This year a record 24% of graduates expect to go on to postgraduate study. Some may think a master’s degree offers so much more than a dumbed-down undergraduate degree. More likely is that it sends a powerful extra signal to employers. Extra education is a useful filter: those that complete it show employers both that they had the brains to get in, and the grit to finish.
But in the longer term, students and their parents are likely to think a lot harder about whether to study full time or part-time, how long for, in what subject and where. When three years of full-time higher education at the age of 18 was free, good and rare, the returns to almost any course were unsurprisingly juicy. Now higher education has become costlier, worse and commonplace, consumers are likely to get choosier about it.
(adapted from The Economist)