Opinion

Is Going to College Worth It?

The Economist magazine is latest to fret that post-secondary education is next bubble to burst.

By Crawford Kilian, 29 Aug 2011, TheTyee.ca

College degree costs

Mindboggling rises in ed costs. Has payoff kept pace?

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A subversive idea has been rumbling around North American campuses in recent months: Post-secondary education, on a cost-benefit basis, may not be worth the time and money.

A column in The Economist quotes investor Peter Thiel: "Education is a bubble in the classic sense. To call something a bubble, it must be overpriced and there must be an intense belief in it."

Most students would agree that post-secondary is overpriced, but their intense belief is not in education but in what it should lead to -- a well-paid career.

Current costs of post-secondary are certainly mind-boggling to pre-boomer war babies like me. When I entered Columbia University in September 1958, tuition was $1,100 a year. I got through thanks to a mix of scholarships, meal jobs, and student loans. In 1962, I graduated about $2,000 in debt.

Those seem like laughably low numbers today. But half a century of inflation makes a difference. In today's dollars, my tuition was about $8,800. My loan was equivalent to $15,265 today -- not much below the $20,400 median debt of student borrowers graduating with B.A.s in the class of 2005.

What's more, according to BC Stats, by 2007 such grads were earning a median income of $45,000 and 30 per cent of them were already debt-free. That's closely comparable to my starting salary at Vancouver City College in 1967: $6,950, equivalent to $46,565 today. (But it took me five or six years to pay off my debt.)

Outstripping 50 years of inflation

Modern tuition and other costs have far outstripped 50 years of inflation. Columbia now charges $21,544 per year for tuition, plus $600 in fees. Total costs for a year there, including food and lodging, must now be well above $40,000.

Here in B.C., the Canadian Federation of Students says average undergrad tuition for full-time students in 1972-73 was $465 (in constant dollars). In 2010-11, it was $4,802, over ten times as much.

In effect, the provincial and federal governments have downloaded more and more costs onto students and their families, who have somehow found the money. (I well recall when the BC Liberals jacked up tuition fees in 2002; at Capilano College we thought we'd been priced out of the market, but our enrollment rose sharply.)

And yet students and their families have kept paying, and we are increasingly better educated. In the 1986 census, for example, 29.7 per cent of us over age 15 had less than a high-school graduation certificate. In the 2006 census, that dropped to 12 per cent. Only 9.5 per cent of us had a university degree in 1986; in 2006, 24 per cent of us did.

Zach Crispin, the head of the Canadian Federation of Students in B.C., told The Tyee that the average debt of new graduates is $27,000. If they can pay it off in 10 years, they'll also pay an additional $7,000 in interest. That's money they can't spend on housing, clothes, or transportation.

Running up still more debt

Very often, such graduates go right back to school and run up more debt. A B.A. in anthropology or French literature is useless in the job market, so career training has become the new graduate study: a certificate in tourism or business management is more attractive to employers. This boosts enrollments in career programs at "teaching universities" that used to be just community colleges.

What could motivate millions of young Canadians, and their families, to mortgage their futures? Have they really created an education bubble like the housing bubble that still shimmers around Vancouver?

A bubble also requires a large supply of "greater fools," people who will buy something at a higher price than its last owner paid. When the fool supply dries up, the bubble bursts. The owner then ends up "under water," owing more than the house or education is worth.

Can an education go under water? So far, no. Students sacrifice the job income they could earn instead of going to school for four or more years, but they generally make up that loss in their future income. (Besides, over half a million Canadian students work part-time or even full-time as well as taking courses.)

In B.C., for example, the 2006 census showed that young workers aged 25 to 34 with less than a bachelor's degree had a median income of $24,604 -- that is, half of all such workers were earning less than $12 an hour and half were earning more.

Those aged 25-34 with a bachelor's degree had a median income of $30,689 -- or $15 an hour. With a post-bachelor degree, median income rose to $32,365. (For all British Columbians with a post-bachelor degree, median income was $46,138.)

Schools need bums in seats

What's more, everyone else is encouraging students to get as much education as possible. The post-secondary system employs scores of thousands of people, many with advanced degrees and good salaries. They have an enormous stake in high enrollments and extended schooling. Not long ago you could get a pretty good job with a one-year certificate in tourism; now Royal Roads University offers a Master's degree in the subject.

Whatever this may do for the careers of students, it certainly sustains the careers of faculty and administrators. If they can invent an enticing new program, Victoria will approve it, students will pay to enroll, and more faculty will get jobs.

And it makes life easier for employers: If they keep raising the academic requirements for a particular job, they have fewer résumés to read and less to pay those they eventually hire. After all, the more B.A.s, the lower the value of a B.A. and the higher that of a Master's or Ph.D. So untold thousands are paying for academic qualifications that may have no bearing on the jobs they eventually get.

Diminishing returns on a degree

Worse yet, from the students' point of view, is that graduates' incomes are falling. A B.A. in 2000 got you a median income of $33,950, over $3,000 more than in 2005.

The same is true of post-graduate degrees. In 2000, such degrees brought their holders a median income of $35,861 compared to just $32,365 five years later.

If the 2011 census shows this trend continuing, students and their families will have to do some serious thinking. A high-school grad who goes on to post-secondary is forgoing about $100,000 in income (at the rate of $12 an hour) over four years. Assume this student also borrows $27,000 for tuition and other expenses. Repayment would take over four years of the student's entire salary at $30,689... and longer if the student ended up being paid below the median.

Of course, the repayment would take many more years than that. Eventually the graduate might catch up with his or her more affluent classmates. But with ever more graduates being pumped through the system, salaries could fall still further.

In effect, students and graduates are trapped in an arms race. Not that long ago, you could join the Mounties with just Grade 10. High school completion was a rare and respected achievement. Then it became just the admission ticket to post-secondary. Now a B.A. is just the ticket to grad school. We worry about Ph.D.s who drive taxis; before long, that could be the key qualification for such a job.

Re-branding education

The schools are trapped in the same arms race. Remember when Gordon Campbell promoted a lot of B.C. community colleges to "universities"? That was strictly a re-branding exercise, because affluent Asian (and Canadian) families didn't want to send their kids to mere colleges.

The purpose of this arms race is not to advance human knowledge, or to improve the human condition. The vast majority of today's students and faculty have no interest in scholarship or research except as a means to a steady income.

To help them achieve that income, Canadian and American governments since the Second World War have heavily subsidized young people's education. To do so, they had to create a professoriate that in turn needed lots of students to justify its own existence. Uninterested and unqualified students had to be admitted to post-secondary just to fill the professors' classrooms.

Subsidizing business, not students

As post-secondary costs rose, governments shifted an increasing proportion of those costs to the students. The subsidy is now going to employers; they no longer have to train their employees, because taxpayers and students pay for that training in post-secondary. (The employers still get to complain about the quality of their new employees.)

Students, meanwhile, pay for 10 times more of their own education costs than their parents did 40 years ago. And they pay it because the alternative is to live on less in a society with a widening income gap between rich and poor. That is an outcome to be avoided at any cost.

If employers ever decided it would be cheaper to train their employees from scratch, and to disregard academic credentials, our campuses would empty out overnight. Then we'd know that the post-secondary bubble had indeed burst. [Tyee]

Crawford Kilian is a contributing editor of The Tyee.

23 Comments:

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  • RickW

    38 weeks ago

    Where Just About Everything Can Be Automated......

    .....a new paradigm is needed addressing how individuals relate to the society (and world) they live in.

    The model held forth by Libertarians and the like is no longer working (if it every did).

  • Justice girl

    38 weeks ago

    The uneducation movement & the MoE push for "21st Century Ed"

    Mr. Kilian's economic analysis is worth considering. Unfortunately, it also relies on employers deciding that they should assume the financial burden of training. Why should they, when governments everywhere are buying into the idea of "personalized" learning or "unlearning" where the individual is responsible for his or her own learning? In this province, the MoE has all received significant time to discuss John Abbott's vision of individualized education where teens go out into apprenticeships in workforce, then return to school to deal with academic questions stemming from work. The MoE believes that parents want more responsibility for directing how and what their children learn. The universities have removed the requirement of provincial exams in subject areas and the government has responded by saying that scholarship dollars will be based on how students perform in mandatory grade 10, 11 & the final grade 12 English exam. This means financial pressure and reward are now on 15 year olds and their teachers.
    None of this pressure is coming from teachers in our public schools, so where is this pressure to change our education system coming from? Our students continue to perform at very high levels compared to students around the world. Why do governments and corporations want our young people so frightened and pressured to succeed in the work world? Could it be that young people who are consumed by academic success and earning money to pay for future success are too busy to look at how the world is changing around them? It makes one wonder....

  • terminalcitygirl

    38 weeks ago

    The slave job market

    The widening gap between rich and poor and our global focus on money as the end goal rather than as a means to an end (like a better, cleaner, just world for example) is really making a mess of things. Education (without a jobs focus; education for the sake of education) is very important socially and culturally for our evolution. Shelter, food, water are necessities but so too are philosophy, community, compassion, hope for without those what life is worth living?

  • Henry Dorsett Case

    38 weeks ago

    @terminalcitygirl

    In one generation we have plummeted from education for its own sake to training salespeople... and when the salespeople stop obtaining gainful employment it is the fault of education?

    This sounds akin to BC Hydro's dilemma - it is purposefully corrupted and when it begins to fall the corruption is ignored and the last pillars of a once great institution are knocked out.

    We need massive change in our cultural philosophy.

  • Henry Dorsett Case

    38 weeks ago

    DRR

    Debt Reduction and Repayment

    was silently discontinued in July 2011 without any announcements or notifications (much like when loan forgiveness was slashed).

    The BC Liberal government takes more funds from graduates (people that should be starting families) than from all BC corporations combined.

  • torontoexpat

    38 weeks ago

    " ... because affluent Asian

    " ... because affluent Asian (and Canadian) families didn't want to send their kids to mere colleges"

    ?

    Can you clarify what exactly you meant here?

  • David C

    38 weeks ago

    @torontoexpat I imagine

    @torontoexpat

    I imagine that Mr Kilian is referring to
    the approximately 25,000 international students (many of whom are from Asia) attending public post-secondary institutions in BC in 2009 (making up about six per cent of the total public institutions enrollment). The families would want their children to have university, not community college, degrees.

    http://www2.news.gov.bc.ca/news_releases_2009-2013/2010RESD0004-001409.htm

  • Don coyote

    38 weeks ago

    post secondary

    Yes, toronto expat, David C is right. I spent much of my career teaching asian students and they confirmed that their parents expected them to go to a university, not a 'mere' college. Hence the orwellian solution of a name change.

  • Henry Dorsett Case

    38 weeks ago

    Macleans

    http://www2.macleans.ca/2010/11/10/too-asian/

    Above is a link to the Macleans article

    "Too Asian"...

    Which is pathetic race baiting and purposeful misdirection when the issue has nothing to do with Asians (or any particular race)- rather with the fact that under the neocons everything is for sale in this country - literally - including our education system. That Asians happen to be a majority purchaser is incidental it could have been Bulgarians (and would be if they could sell out faster to the Bulgarians).

    The neocon sales team has been and will continue to fire sell our resources and our public infrastructure - of course completely undermining both - Healthcare, BC Ferries, BC Rail, Education,...

    The fact is a great deal of marketing of Canadian education is taking place in Asia because that is where the sales force has sniffed out some opportunities to quickly cash in on your infrastructure:

    http://www.bcbusinessonline.ca/selling-canadian-teaching-in-china

  • OwlRol

    38 weeks ago

    Values and value

    Is Going to College (university or community type) worth It? Absolutely.

    Will it get you a great job, maybe not. Perhaps it should, but...

    Will it make you smarter? Only if you are curious about the world or some parts of it, and you are willing to study hard to improve your understanding of your chosen topics, amongst others, in a community of learners.

    If all you want is to jump through some hoops for that piece of paper that says you did so, hoping it will get you lots of cash, there are probably better ways, although the days of working on an assembly line in a manufacturing plant are mostly gone.

    It is that desire to view and better understand our world, a lifelong learning project, both in the post secondary system and outside of it, that make it worthwhile to continue weaving data and knowledges into wisdoms.

    Practical literacy, like learning and practicing music scales and chords, are required, but reading and comprehending what one finds in manuals most often
    gives little satisfaction until applying that understanding to complete a project.

    But it is the joy of reading stories, fiction or not, like playing a piece of music, learnt or improvised, that make it worthwhile. This cannot be measured.

    Of course, funding for survival beyond starvation or slavery is crucial, and sometimes you gotta do what you gotta do.

    Should government and business reverse their ongoing shift away from funding post secondary students? Absolutely.

    It may seem smart for individual bottom lines and short term government budgets to transfer costs onto students, but this neglect is having a large negative effect on our society.

    Some former colleagues from Europe or the islands could not have contributed here had they not obtained inexpensive or free post secondary education. The only requirement was to have very good marks in their courses.

    That is most unlikely if trying to attend full time while working a full time job. Fatigue dulls the absorption and integration of new knowledge.

    We here the cry for skilled labour from government and business, and therefore, for more educated and skilled immigrants.

    But many young Canadians, who have those raw capabilities to fill such needs, would have moved in that direction except for the costs of that educational route.

    One government/business hand just can't coordinate with the other.

    Furthermore, the value of post secondary, (polysyllabic) literacy and exposure to differing, variously thought out ideas certainly helps to prevent the populist, Tea bagger notions that are stifling healthy discourse across our continent.

    On many counts, we need to properly maintain our post secondary institutions and better support those attending students for the benefit of our communities, not just to satisfy short term monetary needs, but also, longer term, less defined, cultural and social well being.

  • One2Work

    38 weeks ago

    The Education Game

    Mr Kilian is right when he says the education industry has a vested interest in promoting higher levels of education. I am in the recruiting industry and from my many years experience, there are far too many PhDs who work well below their education level. Just imagine your odds of winning a decent university teaching position. Too much time & money for a poor payoff. Not quite as bad with a MSc. The average person's best bet is to research demographics (10-20 years down the road), try to target education suited to that market, get a BA, BSc, or a Diploma (3 years), or Journeyman Certification, get involved in volunteer or political work, team sports and develop connections. You may work in a few different companies before you find something you enjoy where you can move up. Resist the impulse to continue beyond one degree unless you are going into Medicine or Bioscience. Become so valuable to your employer that they offer to pay for additional related certifications. Your leadership talents & attitude will promote you faster than more degrees. It's really about demographics, connections and attitude.

  • OwlRol

    38 weeks ago

    How often before it becomes truth?

    Henry DC, I rarely read Macleans or the Vancouver Sun, except to see how the enemy is thinking and very occasionally, to find some thought provoking ideas.

    In this case Macleans is fully recycling an activity that has been going on since before 9/11. Other groups, such as U.S. states, have been doing the same. Australia has the powerful backing of their federal government, difficult for individual school districts to compete with..

    The results have been mixed. B.C. curriculum and pedagogy may not be easily integrated into some Asian educational systems.

    For example, even materials, such as quality school atlases, cannot be brought into China due to references of Tibet or the independent nation of Taiwan.

    Some B.C. school districts have set up these educational business corporations in attempts to raise badly needed money to compensate for provincial underfunding. A few of these have lost money for their districts. The market mish mash at work. (Another form of P3s?) How could there ever be equality between our districts with this model?

    As to Asian students, just like all global students in general, they succeed where families have high expectations and good work habits. Kids from families who moved here from Hong Kong, Shanghai, Singapore or Kuala Lumpur usually do very well, not so much the "satellite" kids from those same locations.

    So Macleans, once again, is extolling the financial market values ad nauseum, without any real educational or societal and cultural depth. What else is new?

  • Fii

    38 weeks ago

    Waiting list in Vancouver high schools

    In regards to education for sale, let's not forget the "seats for sale" to international HIGH SCHOOL students in BC. Today I personally read a letter from school admissions to a student of mine who won't know until mid Sept if she and her brother will "get a placement" in an esl class at a particular school on the west side. If they don't, they will apply at another one. Not sure what they pay in "tuition"...

  • Dan the socialist

    38 weeks ago

    the independent nation of

    the independent nation of Taiwan.
    -

    Taiwan only thinks it is independent. It is just an island of failed criminals who ran away.

  • A Drop in the Bucket

    38 weeks ago

    Technocracy and redundancy

    The day is fast approaching when we don`t need millions of new lawyers, engineers, every law, every precedent has been written every crime committed, new lawyers aren`t doing anything but reciting past lawyers and decisions.

    Engineers, to build what, unless it`s something unique it has already been built, merely input stress loads, tensile strength and the such and presto, out comes the answer.

    Economics, millions of trained sheep being taught the current corporate screed.

    Soon too schools, schools for children can be done with the screen, one teacher guiding millions with bodyguards keeping the peace.

    5% of the world`s population can produce and service the needs of the rest, and even in the dirt ministries, mining trucks the size of a large house, one new giant truck replaces 30 trucks and drivers.

    Old factory closes and a new one opens, old factory employed a 1000, new factory employs 30, this trend will continue...

    The HST was actually rewarding companies to modernize and downsize with tax credits, there are no tax credits on labour, except for the movie vampires...

    India will graduate 10 million engineers and scientists per year.

    You don`t need an in house anything anymore.

    Everything is available online.

    Good day

  • dave49

    38 weeks ago

    Education has become a business

    Let's face it, education has become a business over the last 10 years. Part of the problem is young people will earn these degrees and credentials and the presence or lack of them becomes an employment screening tool. I'm told the Canadian job market is nasty for its obsession with degrees AND the relevant experience. The US apparently focuses more on relevant experience.

    My advice: get a BSc in nursing. A relative started at $60K a year and could earn more in Alberta if they were hiring.

  • zalm

    38 weeks ago

    Henry Dorsett Case

    "The BC Liberal government takes more funds from graduates (people that should be starting families) than from all BC corporations combined."

    Fascinating comment! I'd like to see more on this, if you have some...

  • Shannon Rupp

    38 weeks ago

    Nice piece

    And it only scratches the surface of how post-secondary education has become a fraudulent business that talks about marketing to "customers" rather than educating students.

    Crawford, I wish you'd do a book on this...

  • Crawford

    38 weeks ago

    A book on post-secondary?

    Pleasant thought, Shannon, but who would buy it, and what effect would it have?

    Granted that post-secondary has become a racket, it's still possible to do some neat stuff within it. The opportunity to do a lot of neat stuff will have to wait for major social, political and cultural changes off-campus.

  • gsarahs

    38 weeks ago

    University vs Technical/Trades

    I obtained my 2 UBC degrees by working during the summer breaks, with no student loans. I received my 2nd degree prior to the tuition fees being bumped up considerably. I used to take 1 course more than a full load each year, while it seems that a lot of today's students work at the same time as taking 1 or 2 courses less than a full load, so a 4 year degree takes a year or three longer to complete.

    Two of my adult kids went the university route, and while they are both employed, my estimate is that my electrician son has made considerably more than the other two by a considerable margin, and he worked and got paid in his job while doing his apprenticeship, and is often working a second job as well. My advice was for my kids to aim for something that they had a passion for, and not pushing them in any one direction.

  • Blake

    38 weeks ago

    Universities were here long

    Universities were here long before capitalism and will be here long after it has died. There is nothing wrong with universities if they are being used for the correct purposes, teaching and learning. Philosophy, literature, fine art and the sciences are the fundamental building blocks, and when capitalism finally is kicked to the curb, then with it will go its bastard children, marketing and economics and all the other pseudo subjects. An education is not and never will be quantifiable the way capitalist and economists would like it to be.

  • RickOshea

    38 weeks ago

    Probably Not

    Off-shoring has run rampant in the last decade which means jobs like computer programming have gone to China/India now.

    Odds are, you are going to go deep into debt for an education aimed at jobs that will no longer be available in Canada when you graduate. Moreover, off-shoring puts great downward pressure on the amount paid for the jobs that remain in Canada - this does not bode well for paying off that huge student loan even if you do find a job befitting your education.

    The exception is a high end profession like medical doctor - they in effect have iron clad 'union' protection from outsourcing and competition from foreigners - so yeah, if you can do med school, go for it, that will pay off.

    For most people however, be ever mindful that the 'new' economy is totally rigged against the working class. An education is no longer your ace in the hole and staying out of debt is your only hope of beating the system.

  • Jillian Lynn Lawson

    38 weeks ago

    Confusing Education with Vocational Training?

    You are right that university education is quite expensive, but you seem to have absorbed the current neo-conservative notion, without question, Professor Kilian, that a university education is supposed to be a vocational school.

    Perhaps, using your examples, we should value the deep study of French literature and the study of other cultures. In a democracy, would we not be best served by having educated fellow citizens?

    I would not trade my university education for anything - it opened the world of disciplined learning to me, a world of thought and ideas, a habit of learning that continues today, decades later. Isn't that what we want from our universities?

    Training for a career in tourism or the tarsands, even MBAs (I duck as I say this), seem far too narrow, far to tailored for the needs of the corporate world, to be a true Education.

    If corporations want workers, why don't they train them? If society wants educated citizens, why don't we make it affordable? What better investment could there be?

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