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September 12, 2011 | by  | in Features |
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The Value (?) of a University Degree

Dear Victoria University,
One year ago I finished a Bachelor of [insert subject here] and graduated bright-eyed, optimistic and ready to embrace “the world is my oyster” mantra. Finally I could get the job of my dreams, earn lots of cash (i.e. earn enough to pay off my student overdraft and afford to buy clothes from stores other than Glassons/Hallensteins), begin paying off my student loan then maybe go on my OE. But so far, no luck with getting a job. I’ve realized there are so many other graduates with my degree but so few jobs. Or, so many people with other degrees who are stealing jobs I should be able to get. I now spend my days religiously checking, working for minimum wage at a cafe and can barely make my student loan repayments. Life is pretty av. I have $40,000 worth of debt, no immediate job prospects and next year I will be facing even more competition from the next round of graduates. What was the point of getting a degree? Does it come with a money-back guarantee?
Bitter Graduate

At the turn of last century, students at Victoria University were a privileged minority.

A university education was highly regarded, and usually lead to a high-paying and respected career. Fast-forward just over 100 years and much has changed. There is now a strong expectation that the majority of high school leavers will go to university. University enrolments are at an all-time high, almost anyone with UE can get into university so long as they are willing to take on a student loan, and many graduates have come to the harsh realization that a university degree is no longer a ticket to a decent (or even degree-related) job. Is it time to re-evaluate the ‘value’ of a degree? Is it worth tens of thousands of dollars of debt and at least three years of your life? Does it increase your job and earning prospects—and as some have begun to question—can you still do well without one?

This re-evaluation of university education is not just taking place in New Zealand. Overseas, particularly western countries such as the UK, a negative sentiment towards university education is growing—especially since fees recently spiked and tripled at some universities. Add the high rates of graduate unemployment to the equation and widespread student anger (and protests) result. British entrepreneur and multi-millionaire Simon Dolan has been a prominent anti-uni spokesman. He left school at 16 and adamantly denies the value of tertiary education. In his new book he comments: “I staunchly believe that for the vast majority, university is completely pointless. I think that three years of ‘further education’ fails to educate the masses about real life and the ways of the world. It’s counterproductive and robs people of learning how the real world works, rendering them brain-dead system surfers.” Strong words. In the United States, the debate on university education heated up when multi-millionaire Peter Thiel, co-founder of PayPal offered 24 scholarships of US$100,000 to entrepreneurial students under the age of 20. The main requirement was that they had to drop out of university and work on their business ideas instead.
Back in New Zealand, students and graduates are beginning to question the value of their degree and are wondering what impact—good and bad—a university degree has on their lives. Answering these questions is not easy, especially since there have been no studies that have tracked university graduates once they have graduated and monitored their earnings, the different jobs they were employed in, how long it took them to find employment and so on. The recently announced New Zealand Graduate Longitudinal Study aims to identify the factors that make New Zealand graduates ‘successful’. In the first complex study of its kind, 14,000 final-year students from across New Zealand’s eight universities will be surveyed this year—and again in two, five and 10 years’ time. The overall aim of the study is to answer the very complex question: does a university education influence your life and, if so, how?

You might be questioning the value of your degree yourself and want to know whether it will have a more positive or negative effect on your life. In other words, you want to know if you should build a bonfire to burn all your textbooks and book flights for an overseas adventure. Unfortunately, the results of this much-needed study won’t be available to answer your burning questions anytime soon. While this article will not attempt to conclusively define or equate the negative and positive influence of tertiary education, a question deemed so complex a ten-year government-funded study has been set up to answer, it will attempt to provide you with some food for thought. It will look at why, in 2011, we have begun to question the value of university degrees. Sticky questions inevitably result. Will a degree get me a decent job? Will I earn more with a degree than without? Is a BA a joke? Are the non-financial benefits of university an important consideration?

Firstly, many have come to question the value of degrees because there are simply so many graduates who have them. Arguably, the more people who have degrees, the less value they have. The number of university students and graduates has skyrocketed because of the recession and there is a strong expectation on young people to go to university upon leaving high school. It has effectively become the default option for many high school leavers who choose university because all their friends are going, or their parents expect them to, or both. In addition, there seems to be a continuing unjustified stigma of failure if you don’t go to university and instead go to a polytech or go straight into the workforce. This forces many people into universities who aren’t suited to academic study or simply aren’t interested in university but have gone because it seemed like the right or only path to take.

In addition to the vast numbers of students, there are vast numbers of students doing the same degree—Bachelor of Arts students take note. This begs the question, are universities under a moral obligation to significantly cap the number of students in certain degree types that currently have a large number of students and that lead to very few jobs? Or give the students the choice, but at least warn them that they may be unlikely if not very unlikely to get a job relating to their degree? Without entering into a debate on which topics are ‘better’ or more ‘useful’ than others there is a strong argument for universities to be obliged to educate students about the ‘value’ of their degrees and encourage students into degrees where there are skills shortages but also to warn them of degrees where there are not. As students are effectively paying customers of universities, they are arguably entitled to ask how much bang they are going to get for their buck.

Another reason why the value of a university degree is being questioned is that job prospects for graduates are undoubtedly not as promising as they once were. There are far fewer graduate jobs than there are graduates. While there is are conclusive statistics on the number of graduates compared to the number of graduate jobs, a simple (though admittedly somewhat crude) analysis of the number of graduate jobs on provide a snapshot of the current situation. A search of ‘graduate’ in the job title and job description revealed there are at present, approximately 560 graduate jobs in the whole of New Zealand. Compare this with the number of students at the five major universities in New Zealand in 2010—roughly 123,000. Using a conservative estimate, roughly 15 per cent of those students will be graduates. In the job market this year, that’s 18,450. Taking into account the limits of this rough estimate, being that many graduates will already be employed, some may have gone overseas and not every single job ad for graduates will necessarily contain the word graduate, the difference between the number of ‘graduate’ jobs and the number of graduates is still staggering—18,450 graduates for 560 jobs. One has to ask—are universities setting up graduates for a promising future or the dole queue?

While the number of jobs may be low at present, those graduates who do manage to get degree related jobs are enjoying positive financial benefits from their degree. In 2009, the Ministry of Education and Statistics New Zealand jointly published a study that examined the influence of graduate’s tertiary education on their one-year and three-year post study earnings. The research reassuringly demonstrated that in general, income rises the more qualified you are. The study concluded that young domestic student’s median annual three-year post-study earnings were 51 percent higher for those with a bachelor’s degree compared with those with a level 1 to 3 (upper-secondary level equivalent) certificate and 30 percent higher for those with a bachelor’s degree compared with those with a diploma. The study also highlighted that completing a bachelor’s degree also matters. Young students who completed their degree earned 29 per cent more than those young students who left without completing their degree. So if you’re in your final year and hating university so much that you would rather walk over burning coals than graduate, don’t choose the hot coals.

While this research shows that the more qualified a person is the more they will earn, this may not demonstrate that in all cases a degree is value for money. It may be a reflection of the fact that many employers only hire people with degrees, even for relatively mundane jobs, or jobs that are challenging but could be done by someone who doesn’t have a degree but on the job experience who is entrepreneurial, has great people skills and a good dose of common sense. These are attributes that many graduates aren’t guaranteed to learn from completing a degree. Until employers place less of an emphasis on university degrees, and scrap it as a minimum job requirement for applicants, many graduates will be stuck in a strange catch-22. They won’t be able to get a job with a degree, but won’t be able to get a job without one. It is hard to tell when or if this will begin to change and employers will come to value other non-educational attributes to the same (or similar) level as a university degree, but with the debate questioning the value of degrees as a ‘one size fits all’ option, employers will most likely take notice and may become more open minded.

The final big financial effect a university degree will have on graduates is their old friend, student debt. Without going into detail on the implications of student debt that has been discussed endlessly in the media, the fact is student debt is unavoidable for the majority of students and will take a long time to pay back. It is a further consideration to take into account when deciding whether or not to do a degree that many students don’t take seriously.

While it is important to look at whether degrees increase earning potential, job prospects, are value for money and worth getting into debt for, a university education also has other non-financial benefits that should not be ignored. For many students, university provides an opportunity to start a new life, leave behind the small town they couldn’t wait to get out of (Tokoroa, Bulls and Gore spring to mind), move somewhere completely new but still be in a supported environment. University provides students with the opportunity to make friends, meet like minded people, play cheap subsidized sports and join clubs (at least until student associations are axed by the government), set up networks for when they enter the workforce and also snag themselves a long—or short—term partner(s). Finally, although it is a concept many first year students cannot comprehend, the enjoyment of simply learning is an additional non-financial benefit of a degree. While all this is warm and fluffy, if students predominantly go to university for the social aspect and don’t really care about their degree, it will equate to a $40,000+ social experience, which one could arguably still get (with a bit more effort) by skipping university and going straight into the workforce.

There is no easy yes/no answer to the question of whether or not a university degree is value for money and going to make your life better. All that can be certain is that the value of a university degree is changing so students should question whether university is the only option. While it’s unrealistic to think that all high school dropout anti-university advocates become multi-millionaires, such as the previously mentioned Simon Dolan, there is strong case to be made for just getting out there and giving it a go in the workforce and trying to forge a career in a field that does or doesn’t automatically require a degree, or becoming a tradesperson (many of whom earn far more than the typical university graduate) before trying university and getting into vast amounts of debt. University will always be there to return to later in life. That being said, a degree is, and will continue to be, a valuable asset for many graduates. As a student with an LLB, BA and studying towards an LLM, I’m crossing my fingers that it will all be worth it.

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Comments (3)

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  1. Cormac says:

    Great article and also something that we are questioning in Ireland, where we have the higest percentage of graduates in Europe and 14% unemployment. Fun times ahead.

  2. Horst Maczuga says:

    I agree a university degree is not for everyone. One should pursue what they perceive as a rewarding job/career. The university environment develops a questioning mind and how to answer those questions. It also challenges students self-discipline to achieve what employers often view as a quality they regard as positive.

    A student should not be denied university education because of lack of funds. Loans should be available for those who qualify and repayment should commence once they have a job at a very low interest rate. In some cases these loans should be cancelled because they are in fields that are recognized in shortage.

    We are more educated than our previous generation but we must be mindful of maintaining a balance in life skills so that society can afford a plumber or a lawyer in the future.

  3. Another Irish comment: that’s a great article, well written and definately hitting the main points – e.g., I find that the ‘social experience’ (and social objectives) you mentioned are heavily weighted factors that most people don’t give enough recognition to. I think these strongly influence people when deciding to apply to university and while they are actually in university.

    In an ideal world I think that students need to plan many things. They need to plan according to their social objectives, engage with new clubs/societies/sports, engage with career planning early and consistently, gain work experience, understand the value of their degree from the point of view of an employer, and, achieve the highest grades as possible. It’s a lot of work!

    As usual when different perspectives are involved, communication problems occur. The different stake holders here (students, the universities, employers, government) all seem to have different expectations. It’s a tough job to connect all these stake holders, and get them to accept each other’s point of view…but that’s the objective as I see it!

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