The University Bubble

Alexander Fiuza - New Writer

University College, Oxford | Image: Lawrence OP/Flickr

In 2013/14 a million first year students enrolled in British universities. The universities will receive £9,000 a year for every student plus profits of around £1,400 for every bed filled in student accommodation. Adding £59 billion each year to the economy, the university business is worth more than agriculture or pharmaceuticals in Britain, and it is growing, a great university bubble fuelled by government-backed debt. This state of affairs will not last, and that is a positive good.

Almost half of graduates who are employed at all work in non-graduate roles ranging from secretaries to cleaners; 7% of graduates do not find employ at all. These people, over half of all who make it to graduation, have gained nothing but a piece of paper and mountain of debt. Some would bemoan the lack of jobs that suit these graduates, but jobs exist to provide a service and not to indulge graduates. The real problem is that so many take degrees for which there is little demand, whether because their degree or their university is held in low esteem.

The worst degrees and universities need not fear being undersubscribed, however. They suffer no harm for offering mediocre accommodation at eye-watering prices, on which they can have profit margins of over 50%, nor for charging as much as is legally allowed for minimal contact hours. This defiance of economic gravity, this lopsided world, owes its existence to 2 distortionary factors: our culture and our government, flooding the sector with uncertain students and cheap loans, respectively. It is the prior that is critical, and the prior will change first.

As more graduates end up underemployed or unemployed, the importance of looking beyond university will be recognised. As Universities find new ways to price-gouge their students while pushing for tuition fees to be yet higher, more of those students for whom it was never right will realise that they are being had. Their experiences will percolate through the culture, and they will alter it. As the culture changes so will life choices, and as life choices change so will policy.

Image: Teddy rised/Flickr
A lecture theatre | Image: Teddy rised/Flickr

This isn’t just a theory; its effects are beginning to be seen here and across the pond in the USA, where universities have more developed strains of the same problems. Here the incredibly successful apprenticeship programme is opening doors beyond campus even as whispers of discontent emerge in the media. In America there are presidential candidates saying publically that university is not the only way to go and that other options should be encouraged. It is just the beginning; as more take advantage of apprenticeships, as vocational training grows more respected, as the qualifications given by alternative universities rise in esteem fewer will feel the need to mire themselves in debt. As it dawns on more and more of the young that they don’t need university to be successful, productive and happy; university attendance will stop rising. The process may be slow, and it may take many years yet, but the university bubble will burst.

Once the bubble bursts we will have a better Britain. This defies the conventional wisdom that more people enrolling in university is always inherently good, but it is the reality. The benefits for those who take paths better suiting them are obvious, as are the benefits those people will provide to wider society. Those nations that already to some extent maintain a more reasonable balance between universities and vocational training, Germany chief among them, are living proof of this. Those who continue going to university will benefit too; once oversubscribed degrees will increase in value and universities will try harder to attract students, whether by improving their services or lowering their prices.

It won’t all be positive, of course. Some of the least effectual universities may go under as too few attend them. High quality research will hold up, however, as the best universities will still be in demand and in receipt of government subsidies. The towns hosting ailing universities may lose out, as the money those students brought to the local economy is removed, but in the long run those towns will adapt and improve.

When it comes, and it will come, the end of the artificially inflated university bubble will mark a much-needed rebalancing. As with every change it will have winners and losers, and in this case far more stands to be won than lost. A Britain that treats universities realistically, that gives the young the choices they deserve, that better nurtures potential beyond the academe is the future, and that is a positive good.