In my previous post ‘The Games Adults Play,’ a commenter named Rob linked to an article that questioned the value of American college education, and linked to another that compared inflated US college tuition levels to the housing and dotcom bubbles. A consensus is slowly but surely emerging that American institutions of higher education are overcharging for a too often lame education.
The culprit seems to be easy access to low-interest loans, which is what propelled the housing bubble. But what’s really causing greater debt and even greater mediocrity among many US college graduates is ‘credentialism’, which is the natural consequence of any mass society.
What’s happening in American higher education is no different from what happened in China starting in the late 1990s. To induce consumer spending in a nation of notorious spendthrifts, Premier Zhu Rongji deregulated the education markets so that Chinese colleges and universities overnight doubled their classroom size and tuition fees. The upshot: Like in the United States today, Chinese colleges and universities are graduating too many students with no real abilities, but with very real debts.
The cause isn’t just politicians favouring policies that please the people in the short-term (a college education for all), but which will stick society with a hefty bill in the long-term (a bad, expensive college education for all). It really has to do with the fact that, in the mass technological free market societies that are both China and the United States, people have agreed there’s only one fair way to select winners and losers: credentialism, often referred to by its euphemism ‘meritocracy.’
Ability, talent, and experience are ideally how companies ought to hire employees, but these are unfortunately in too short a demand to satisfy the needs of an economy of 300 million people, let alone 1.3 billion people. More perplexingly, these are all subjective characteristics that are hard to identify, and prone to never-ending debate.
A university degree isn’t, however. An individual’s college and advanced diplomas are the only part of the resume that is immediately reliable, confirmable, and comprehensible. That’s a crucial quality to any mass organization that needs to hire hundreds from tens of thousands of applicants, and just can’t vet every single applicant’s work experience and personal recommendations. Having a university degree doesn’t necessarily open doors, but not having one will most certainly close them.
This in effect means that colleges and universities are at best gatekeepers, and at worse toll collectors. And this means that US colleges and universities are either incentivized, as in the case of the most elite, to reject as many people as possible to maintain their allure of exclusivity, or, as in the case of everyone else, to let in as many people as possible. And that’s why an increasing number of American colleges and universities are traveling to China each year to recruit Chinese students. As long as this toll collecting system is in effect, all US colleges and universities are incentivized to focus on recruiting and admissions, and not on actually rigorously preparing students for a 21st century global economy.
All this means is that while American higher education, like its Chinese counterpart, may offer a sometimes poor education at an inflated price, it isn’t an asset bubble. A 21st century global economy means that if indifferent and lazy American students smarten up and drop out of colleges and universities to become plumbers and auto mechanics, indifferent and lazy Chinese students are more than willing and ready to replace them.
And when that happens, (because it will most certainly happen), everyone suffers. US colleges and universities will have to find a way to dumb down their curriculum even further to accommodate all those non-English speaking Chinese students (offer a double major in World of Warcraft and Counterstrike?). And both the Chinese government bureaucracy and economy will become plagued with individuals who having failed miserably to get a proper education in China, failed even more miserably to get a proper education in the United States.
Unfortunately, that’s just the nature of the global economy we’re living in, where an extremely mediocre individual with a Yale BA and a Harvard MBA, and a slightly less so one with a Columbia BA and a Harvard JD have both ascended to the very top.
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Mystery
Another great article.
With more realistic figures ($55k tuition for 4 years and $20k difference in salary for 40 years), I calculate a lifetime value of $500,000 for a college degree. I ignored inflation and loan interest, assuming (like in the UK) that they are linked. Like all the analyses Rob cited, I used a Discounting Rate of 0%.
But, as the Cracked.com article says, “[the future is] basically not even you anymore!” Many young people live for the moment. Instant gratification prevails, and tomorrow doesn’t matter.
A student who cares only for short-term profit (let’s factor in a small Discounting Rate of 3%) values a college degree at $131,000 according to these parameters. A slightly more short-sighted student would value college negatively (assuming a still-modest Discounting Rate of 5.5%). College is a long-term (indeed, lifetime) investment, and can only be appreciated by students who care about their long-term future. Proponents of instant gratification will find college—and school—useless.
Since degrees can’t be bought or sold, they can’t be commodified like houses. It would be more interesting to calculate the value of a degree (I expect that actuaries already do this) by race, income, gender, Zip code, high school grades and hobbies. The value of each person’s degree would be different, which begs the question: (1) How can you get the most out of YOUR degree?
And most of the benefits of college just can’t be measured financially… (list omitted for brevity), making it worthwhile for many even if there’s a net financial loss. Another question: (2) What can you gain from college that’s not financial?
The gatekeepers/toll-collectors analogy is only true if nobody shows you what to do beyond the ‘gate’. Colleges can be much more than gatekeepers if the students have the right preparation. (3) How can we determine a person’s ability, talent and experience (and I’d add passion), if a resume, a degree and an interview are insufficient?
I’d be interested to see answers to these three questions.
p.s. science is also plagued by gatekeeping/toll-collecting. The main job of UK professors now is to persuade the government to give them money. It’s more than a full-time job.