Weekly Business Insights from Top Ten Business Magazines | Week 291 | Shaping Section | 1

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 291 | April 7-13, 2023

The university lottery

The Economist | April 5, 2023

Listen to the Extractive Summary of the Article

It is fashionable to be gloomy about the costs and benefits of a degree. In America a majority of people now tell pollsters that they think going to university is not worth it. For the average undergraduate that is far from the truth. In rich countries people who hold a bachelor’s degree earn over 40% more than those who do not. This premium has remained lofty, even as the number of university-goers has soared: some 33m people are studying undergraduate degrees across the rich world today.

Yet those average figures hide queasily large differences. For a shocking share of students, the returns from attending university are puny. About 25% of men and 15% of women graduates in England would have been better off financially had they not bothered. In total, student debt has reached $1.6trn in America, 60% more than is owed on credit cards. Low earnings help explain why about a fifth of America’s student borrowers were in default before the pandemic.

Those who do worst out of higher education attend shoddy institutions, are badly prepared, give up, or choose subjects that lead to low wages. Many who do complete their courses are loaded with debt and equipped with a degree of peripheral relevance that has been taught badly. They are being ripped off, not prepared for a better life.

The good news is that young people are voting with their feet. A dramatic shift is taking place as students switch to subjects that are linked to better earnings. In America, for example, the numbers enrolled in computer science have more than doubled in a decade. Those studying English and history, subjects that are less likely to raise wages, have fallen by about a quarter. Some universities have begun to cull courses.

Governments should seek to accelerate this adjustment in the higher-education marketplace. But all too often their instinct is to throw money at the problem.  A better alternative would be for governments to invest in giving students the information they need to make sensible choices.  Governments should also be fussier about which courses their cash helps pay for.  Some universities and colleges resist these kinds of safeguards. 

3 key takeaways from the article

1. It is fashionable to be gloomy about the costs and benefits of a degree. In America a majority of people now tell pollsters that they think going to university is not worth it.  For a shocking share of students, the returns from attending university are puny. About 25% of men and 15% of women graduates in England would have been better off financially had they not bothered. Those who do worst out of higher education attend shoddy institutions, are badly prepared, give up, or choose subjects that lead to low wages.
2. The good news is that young people are voting with their feet. A dramatic shift is taking place as students switch to subjects that are linked to better earnings.
3. Governments should seek to accelerate this adjustment in the higher-education marketplace. A better way could be to invest in giving students the information they need to make sensible choices.

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Topics: Education, Employment, Skills