Value of uni degrees down as costs climb
The value of university degrees is being eroded by the increasing number of graduates and competing courses, says the head of Adelaide University.
Changes to the way the jobs market values degrees have also diminished their value, university vice-chancellor Warren Bebbington told a Centre for Economic Development lunch in Adelaide yesterday.
Because universities no longer have a “monopoly” on knowledge, they can’t expect an automatic and steady flow of young people looking for an education, he said.
At the same time, the rise of private universities and free online university courses have increased the competition for students.
“Private providers around the world now are providing the content of what we had a monopoly on, in some cases doing it much better than us,” Bebbington told the lunch.
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“The system has been uncapped, so many more people can get a university degree.
“At the same time, sadly, the value of university degrees has been falling. In the United States, the average earnings of a graduate has been declining – 14 per cent in the last 10 years.
“Meanwhile, the number of graduates competing for the jobs is exploding. Seven years from now, in 2020, 30 per cent of all the world’s graduates will be young Chinese between 25 and 34 years of age.
“It was always said that a university degree had a value in getting a job. We know now from the research it has a value in getting the first job. [With] later jobs, there are other things, such as the employer you just worked for, that turn out to be more important.”
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While the market for a university degree is growing increasingly competitive, university costs – unlinked to normal supply and demand pressures – continue to grow.
“Costs in university are rising faster than inflation,” Bebbington said. “Oddly enough, the rising costs in universities have rather little to do with the costs of teaching.
“For many universities, it’s the increasing costs of research equipment and research infrastructure that dictates the increase. Crudely, in Australian universities today, teaching is the cash cow which funds research.”
Without a monopoly on content, universities will increasingly need to compete on teaching quality.
“One thing is certain, content is now ubiquitous. The learning monopoly we had has gone.
“I believe in the coming years we’re going to have to separate quality and cost.
“Much of the value we’re adding in the future, if we’re going to succeed, will not be content, which people can now get almost anywhere; it will, as it has never been before, be the quality of the teaching and the gap that we put between us and the MOOCs (online courses) and the private providers.”
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