Is a degree all it's cracked up to be?

Is a degree all it's cracked up to be?

Are university degrees overpriced? How many students considered this question when choosing what and where to study in 2014, or the potential return on a six-figure investment?

Three years of a university undergraduate degree and lost wages during that time (assuming full-time work was available) would easily crack $100,000 for even general degrees. Wages aside, many students leave university with tens of thousands of dollars in loans that take years to repay.

Is the debt worth it? The standard answer – university graduates achieve higher employment and wage outcomes than non-graduates – is true of many students. But will that trend be as strong as the labour market is transformed and university graduates are less in demand?

Some universities are pushing for 10 per cent fee increases – at a time of rising graduate oversupply – such are their growing costs and funding pressures.

How many university graduates does Australian business need each year? A lot fewer than are being pumped through the system. Even professions such as law and veterinary science have recently warned of a graduate oversupply.

Yes, university degrees are highly valuable for the right students. As a part-time uni lecturer, I see students who develop terrific critical-thinking skills that will last a lifetime and repay the cost of their degree many times over. Also, some degrees are exceptional value considering the work that goes into each student and the resources available.

But I am concerned for the bottom half of students, many of whom should not be at university – at least straight after school – and who will leave with an average degree and a $40,000 debt, only to work in a succession of low-paid part-time jobs as they struggle to find professional employment.

Too many students go to university when they are not ready – or not at university level, academically and emotionally. Some young men, in particular, seem to have little or no interest in higher learning – only scraping a pass – even though they incur huge debt to laze about.

You could blame universities for this: lower entry requirements and softer marking in some courses compared with previous generations may have devalued bachelor degrees. If more people can do the course and fewer fail, is it still worth as much? And have universities, generally, sacrificed student quality in the quest for quantity?

However, the real problem is society attitudes: we still expect young people to spend years at university and pay huge course fees to prove they are smart and diligent enough to be employed in a graduate position. It’s dumb and outdated.

We railroad young people towards university straight after school, when many would be better off finding lower-paid work and studying part-time, or deferring full-time study until they are more mature, experienced and better able to fund their degree. 

I’m worried about the outlook for graduate employment in Australia. One in eight employers recruited no graduates in 2012, down from one-in-10 a year earlier, Graduate Careers Australia reported in February. I expect that proportion to fall further in the next few years.  My guess is there will be more stories about a rapidly deteriorating graduate recruitment market in the first half of 2014 or 2015.

I hear about employers deferring or reducing the size of their graduate recruitment program, given rising economic uncertainty and less incentive to invest. It’s an easy cost to cut when business is slow, even though it can have long-term repercussions when trade improves.

Perhaps less graduate employment is a cyclical consequence of a sluggish economy. I suspect it is as much a permanent, structural change as business recognises that:

  • It can automate more graduate jobs or outsource them overseas.
  • A worldwide shift towards micro-jobs and freelancing provides a much larger, more flexible workforce and less need to hire as many university graduates.
  • The cost of hiring and training university graduates, some of whom may only work for the firm for a year or two, outweighs the benefits.
  • Some university courses are not producing enough graduates of sufficient quality who can create short-term value for their employers, and are highly innovative and adaptive.
  • Recruiting a large pool of graduates and developing the next generation of managers is no longer as pressing issue for as many companies.
  • An increasing oversupply of graduates gives companies more recruitment options.
  • A growing recognition that the rapid pace of change in global business means skills need to evolve faster than ever. Three years in a classroom might be less effective as a learning technique.
  • Wages and on-costs for graduates in some industries are too high.

I wish more companies would take back part of the training function – greater on-the-job learning through internships and cadetships – and less reliance on full-time university study, at least at the undergraduate level.

More part-time study on top of full-time work; less full-time study. Earn and learn at the same time – not one or the other for three years when many students are still unsure about their favoured profession.

Working full-time and studying part-time for four or five years takes incredible commitment: I’d hire such a student any day over one who only studied full-time.

Even better would be a recognition that many young people are better off going to university in their mid to late twenties, after a few years in the workforce, and when they are ready to learn and have some real-life experience to back it up.