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Higher education is a highly relevant and controversial topic in today’s society and economy. Specifically the aspect of tuition fees which, with the surging costs and rise of socialism, has been protested against by youths across the developed world. This essay will consider the costs and benefits of higher education, the purpose of a degree, as well as analyse the current equilibrium within the market. The proposition to privatise loans and encourage vocational paths as a solution will then be discussed, which should lead this essay to conclude the reasons of question should a college or university education be tuition free or not.
In order to analyse the costs and benefits of higher education it is important to take into account the opportunity costs for both the individual (being the student) and the government.
Supposing the government offer subsidies – the benefits from this would be an increase in productivity and output in the economy.
Scotland, for example, abolished tuition fees for all young Scottish students studying in their domicile in 2007 as part of their strategy to improve their stagnant productivity levels.
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Government-run Student Awards Agency for Scotland (SAAS) not only pay these fees to the universities, but also provide loans and bursaries to those students requiring financial aid. While this may come across as inclusive and egalitarian, it is faced with the problem of competition. This is because the number of places available at a university must be capped by the Scottish government in accordance to the taxes and available funding.
In addition to this, a large portion of acceptances admitted by universities will be prioritised for overseas students since they are required to pay for full tuition. What this highlights is that the Scottish government are now under pressure to fund the high demands of higher education, which can lead to austerity in other aspects of total government expenditure. Another cost incurred by the government from this move is an increase in borrowing. The Student Loans Company has reached a painstakingly high level of debt recently, and so will find themselves having to borrow larger sums of money from investors. This isn’t usually a problem for the government, since in England, for example, they lend this money to students at RPI +3%, which also no longer accounts it as government consumption and so improves GDP. However, the rise in debt should not be looked at positively and only reminds us of the difficulties that arise when we allow tuition fees and student loans to be under the provision of the government.
In contrast to Scotland, students in the rest of the UK are imposed with tuition fees reaching up to £9,250 per academic year. The costs incurred here are obviously the high levels of debt most students face from borrowing money from loan companies. However it could be argued that there is no equivalent opportunity cost to this because a higher education is considered inelastic in the job market, due to it being a unique and indispensable part of life. To many young people, a degree is a pursuit which many of their peers partake in and is seen as a crucial step in striving for a stable income in professional employment, so the costs of attaining this qualification are undermined by its benefits in the long-term. In other words, there would be indirect costs (added loss) incurred if one didn’t pursue higher education.
To further this, economist and Nobel Prize winner Michael Spence’s ‘Signalling Theory’ could explain the purpose of a higher education. With an academic qualification or degree, Spence explains that this acts as a signal to employers by conveying a certain set of skills or abilities to them. However it is also important for students to recognise the ‘full-disclosure’ principle – they must have been able to attain good enough grades throughout their entire course(s), for if they hadn’t, the principle asserts that it must still be disclosed in their applications. Those who purposely miss out poor grades in their CVs will be at risk of sending the wrong type of signal to employers, such as having a poor work ethic or not being as diligent as other potential candidates. Moreover, it could be argued that certain degrees are themselves poor signals. According to the basic principles of supply and demand – employers (the demand) are looking for workers who provide surplus value to them and their company with their applicable skills and knowledge. Degrees such as STEM, law and business courses provide a foundation for these skills (the supply) due to their comprehensive and cross-disciplinary teaching, allowing graduates to choose from a wider variety of professional employment. Other courses such as women’s studies which have arisen alongside societal trends, or more specific courses such as divinity/art studies are less versatile in nature and thus can be more difficult to use as an asset for employment. We are currently in a ‘bad equilibrium’ in this case – there is an influx of degrees with similar skills and attributes which do not meet up with the limited demand for such qualities.
However it is becoming less and less important to employers about having an academic qualification. Rather, they are looking for people who have experience either within their institution or in a particular field. This is usually done through internships which both students and non-students can apply to. So, what is the point in a degree? If they are just a signal – and a poor one at that – exempting only a handful such as medicine and law which are constantly in demand to employers, surely there are more virtuous and cost-effective paths one could follow to reach the same destination?
Indeed, it could be argued that a solution to the oversaturation of graduates with unmarketable degrees is to redirect students into pursuing a degree which is guaranteed to have long-term employability. The latter can be enforced by either privatising student loans which, unlike the government, will apply more scrutiny to the individual and their academic pursuits. This was suggested by popular US right-wing political commentator Ben Shapiro who stated “privatizing student loans would do a lot to inject a measure of rationality and forward-thinking into college” . This will act as an incentive to students to be more pragmatic with their futures and to choose a route that is beneficial to them both personally and financially. Another solution is to encourage more students to follow vocational routes. Despite Germany being admired for its universally free higher tuition, only 27% of its young people actually decide to take advantage of it. Instead, youths are more attracted to the ‘dual-system’ in Germany, which - similar to apprenticeships, combines general theory classwork with practical work experience under a modest salary, leading them to later work in a fully vocational atmosphere. In fact, 1 in 4 graduates decide to pursue this system after obtaining degrees – why? Because it offers the most promising form of employment for youths across the country, being one of the main factors contributing to Germany’s place as the OECD country with the second lowest unemployment rate after Japan. This shows to be a helpful method for young people as it gives them the experience they require to meet the evolving standards of employers, while also saving them from being in severe debt. Taking both of these solutions into account, an idealisation can be made – encourage more youths into internship and apprenticeship (‘dual-system’) programs to not only equip them with skills competitively similar to those attained in degrees, but also introduce them to working environments at a much earlier stage which will improve their proficiency in the given field. Then, privatise student loans to filter down the number of applicants who don’t display enough promise with their degree and prioritise those who will guarantee successful repayment with a stable profession. Both of these will help reduce youth unemployment in struggling economies while also taking a weight off taxpayers’ shoulders, boosting not only productivity but also reducing government consumption.
From this it is clear that tuition fees should remain as fees, and not fees subsidised by public ordinance. Leaving it to the government only digs the economy into a deeper hole with excess borrowing, higher taxes, austerity, and sky-high debt. Students should be better informed about other prospects available to them, since the influences from society have led to a surplus of degrees, contrasting with the under-demand of such skills from employers and firms. Applying more scrutiny and rationality in this way will help improve a country’s GDP and make the future seem a lot less daunting to young people who are choosing what to invest the next decade of their lives into.
Should a College Or University Education Be Tuition Free Or Not. (2024, Feb 09). Retrieved from https://studymoose.com/should-a-college-or-university-education-be-tuition-free-or-not-essay
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