A High Degree of Value?

When I decided to go to grad school, a friend approached me and said that he was proud of my decision. But he also said that I would soon know what he knew: that higher education is one of the biggest circuses on the face of the earth. He then said, “I don’t tell very many people about this, but I have a PhD.”

As we have increasingly focused on getting people into college and on getting them bachelor degrees, the value of those degrees has become diluted somewhat and the demand for post graduate degrees has soared. There is clear evidence that colleges and universities have dumbed down curriculum and entrance exams. There is evidence of widespread grade inflation.

There has also been some dilution of higher degrees as well. In my master program we had a guy that made me seriously think that if he could get a master degree, so could your average zoo ape. Although the school repeatedly threatened to drop him, he somehow kept coming back. (Money talks, I guess.) He diluted the value of everyone else’s degree.

Beyond this problem, however, is the sheer economics of supply and demand. In many areas of study, a significant oversupply of PhDs exists. There is a job market for PhDs in many fields (especially the professional fields), but the natural PhD career path in a number of fields is within the university system itself. And frankly, in those areas they are training far more PhDs than the system has available jobs. The natural result is that many of these people, after years of dedicated study and departmental butt-kissing, end up underpaid and/or underemployed.

Stories and documentation of this phenomenon abound. Try googling PhD oversupply or PhD supply demand. We used to joke that the best skill you could learn if you were getting a bachelor degree from a liberal arts college was the ability to ask, “Do you want fries with that?” It seems as if this same joke can now be applied to some PhD programs as well.

The way it works for many people on the PhD path is that they end up as research assistants working at a large university. They get paid paltry wages for their efforts because there is a large supply of similarly qualified individuals that would gladly do the same job. Frequently, research assistants that are barely eeking out minimum wage are the ones doing the teaching in the undergrad classrooms, while the actual professors are busy with supposedly more important stuff. Studies show that the quality of undergraduate education suffers as a result. The odd outcome is that undergrad students at smaller, less prestigious colleges — where the profs actually teach classes — often end up with better educations than their peers at major name universities.

The government hasn’t helped matters at all. In the ceaseless push to make sure that everyone can go to college, the federal government and state governments have created a cornucopia of financial offerings, including student loan programs, grants, and scholarships. This has increased both long-term student debt as well as demand on the system, since prospective students have greater access to funding. Even small state sponsored colleges now regularly turn away applicants as student demand exceeds supply of services.

The higher education industrial complex has been infused with vast amounts of taxpayer sponsored cash over the past several decades. With student demand exploding, colleges and universities have little reason to keep costs down. Thus, tuition and fees have expanded at about double the rate of general inflation over the past 15 years (see here). The reasons for this can be explained in any Econ 101 course discussion of supply and demand.

For all of our educating, there seems to be a disconnect between what is learned in college and the skills that are needed in the workplace. Except for certain specialties, employers often end up having to do significant on-the-job training for new college grads.

There have also been studies calling into question the lifetime value of some types of degrees. This Money Magazine article tries to make some sense of this. But it doesn’t seem to take into consideration the net present value of the much-ballyhooed increased lifetime earnings of a degree as opposed to the future value of money spent getting a degree. A significant point one should take away from the article, however, is that degrees in some fields are inherently worth a lot more than degrees in other fields.

As an interesting corollary, this Money Magazine article highlights six reasons you should consider not saving for your child’s college education. Unfortunately, among the reasons listed is that you could hurt your child’s chances of getting financial aid. In other words, your child is encouraged to fall back on big government programs. I’m not sure that’s what I want my children to learn. But the article does bring out a very important factor that nobody should forget when it says, “College is not the only route to success.” I posted about this topic last year.

The higher education industrial complex has a great stake in promoting the concept that a college degree is the only way to success in life. But the fact is that most of us rub shoulders every day with happy and successful people that have no college degree. Real life education can come from sources other than colleges and universities. We seem to give short shrift in our society to vocational programs and entrepreneurship. Could it be that we collectively suffer from some kind of prestige-induced myopia (aka snobbery)?

It’s a noble aim in life to become educated and to use that education in a positive and productive manner. But we need to face the fact that education can come from a variety sources and that higher education degrees do not always lead to increased earnings. I want my children to be happy, educated, and successful. But that does not necessarily mean that I want them to go to get advanced degrees or even go to college. I want them to be aware of as many potential avenues to these high goals as possible, and I want them to pursue the course to these goals that best suits their talents and abilities.