In today’s evolving job market, going to college is now almost required. Yet the cost of tuition continues to rise into the stratosphere and graduates are discovering that their expensive degrees aren’t translating into good-paying jobs, causing many to rightfully question whether college is still worth the price. I believe we have created a toxic economic environment in which colleges have strong incentive to rip-off and exploit their students. So how did we create that environment?
In the past, only wealthy people could afford to go to college and those were usually folks studying to become doctors, scientists, lawyers, or engineers. Therefore, the number of degree holders was lower in relation to the number of available jobs. For that reason, having a degree carried value and just about guaranteed it’s owner excellent employment.
Luckily, if you couldn’t afford to attend college, there were still plenty of middle-class manufacturing jobs that only required a high school diploma so it was possible to still make a respectable living without a degree. But over the last few decades, most of those jobs have been outsourced overseas, or automated by machines, thus reducing the number of job opportunities for the uneducated. And the few manufacturing jobs that haven’t been outsourced have become increasingly high-tech to the point where some type of post-high school education is needed.
This has resulted in an increased market demand for college degrees. But the value of a degree has diminished because there are more workers competing for fewer decent jobs. That’s why employers are now demanding degrees and that’s why going to college isn’t producing the return on investment that it used to. But if having a degree no longer guarantees stable employment, then why is it rapidly becoming more expensive to obtain one and why are so many youths still willing to nearly bankrupt themselves to do it?
The surprising answer is because we have continued to pour billions of dollars of government-funded subsidies into the higher education system. Consider this point… In the free-market, if your competitor offers the same product or service as you but at a lower cost while improving quality, then customers will flock to your competitor. If you want to stay in business, then you have to find a way to offer lowers prices or better quality than your competitor. The free-market economic system mirrors natural selection – survival of the best.
Now let’s say the government gives both you and your competitor financial subsidies to make your product or service more affordable to those who can’t afford it. This sounds noble and well-meaning on the surface but it ends up having the exact opposite effect for one reason – when a portion of your income is guaranteed and you don’t have to work for it, you lose the motivation to better your business model and so does your competitor. Neither of you will have any compelling reason to improve your product or service, but you will have good reason to jack up your prices because you know the government will simply increase your subsidy. Reliance on subsidies removes the element of competition and ultimately it’s the consumer who suffers because of this.
This is why we have the tuition bubble. We give colleges subsidies to make higher education more affordable to low-income students. But since the changing job market has created increased demand for a degree, colleges have strong incentive to dramatically raise the cost of tuition. This creates more students who can’t afford higher education, which creates the need for higher government subsidies, creating a vicious cycle that only serves to inflate the bubble further. And while this is going on, colleges have lost the motivation to improve the quality of the education they give their students, thus resulting in the increasing number of graduates who are going into massive debt to gain a degree that is declining in value, thanks to the law of supply and demand that I mentioned earlier.
So what can we do about this? Well first off, we should stop subsidizing higher education to the degree that we currently are. This may sound counter-productive but it will go a long way in restoring desperately needed competition in the college market place and with big subsidies removed, colleges will be forced to significantly cut tuition rates to make higher education affordable to the widest range of consumers. Additionally, this will also give schools the motivation to provide better quality education so that students are actually getting what they pay for.
But don’t think that I’m entirely against subsidies because they do have their place. For example, the G.I. bill gave millions of returning WW2 veterans the chance to go to college, resulting in the post-war economic boom that gave rise to our middle-class. Subsidized education should only be available to those genuinely need it but should always come with reasonable requirements, such as maintaining a minimum overall grade to keep from losing benefits, so that only those who truly want to better themselves will receive taxpayer funding.
Lastly, as much I believe in higher education, we should also be questioning whether the idea that EVERYONE must go to college is even realistic in the first place. Not everyone is cut out for the college environment. Some folks are natural entrepreneurs while others might pursue careers in the arts, the military, or apprenticeships in various skilled trades. If there are ANY opportunities to secure a good job without ever setting foot inside a college classroom then we should be encouraging them.
Knowledge is an immensely valuable asset and to deprive an inquisitive young mind of knowledge is one of the most criminal things you can do. But that’s exactly what we’re doing. We’re denying young people knowledge, unless they’re willing to drop a big heap of cash to receive it. And even then, they don’t always get what they pay for. The situation we’ve created is not much different from giving a drug addict a free taste of heroin then jacking up the price once he’s hooked. The only difference is at least the addict is actually getting the product he paid for.
– The Young Overviewer
Empower The Young 