A recent article in the Economist asks the question: “Was your degree really worth it?” [1] The article reports that students and potential students are losing confidence in the value of university degrees. Increasingly, people are questioning whether or not it is worth the time and the money to get a university degree. The data is starting to show why.
I studied mechanical engineering at the University of Pretoria. When I was in my final year of undergraduate studies, the Dean of Engineering gave us a lecture to prepare us for the workplace, to point us towards registering as professional engineers, and to encourage us to do postgraduate studies.
Regarding his encouragement to do postgraduate studies, he said something along these lines: When your grandparents were looking for employment, knowing how to read and do math was good enough. But a high school certificate gave you a competitive advantage. When your parents were looking for employment, a high school certificate was good enough. But a university degree gave you a competitive advantage. Therefore, when you’re looking for employment, a university degree will be good enough. But a post-graduate degree will give you a competitive advantage.
The Dean was right. As reported in the Economist, from about the 1980s, there has been a boom in income difference between those with degrees and those without. In the 1970s, those with degrees earned about 35% more than those without. In 2021, that number was at 66%. However, continues the article, this number has stayed there. Also, in some fields, it has started to decline. The article also notes that the return on investment of a degree is highly dependent on the choice of degree and whether or not the student finishes on time.
The Choice of Degree
In my article on Robert Kiyosaki’s advice making you broke, I made a similar argument. Modern times have given young people more and more options. There is certainly a lot of money to be made by business-minded people without tertiary education. However, if one chooses a qualification in a field with high demand, such as the STEM fields, on average, these graduates do far better financially than entrepreneurs. Furthermore, these graduates set themselves up to be entrepreneurs, should they desire the change. By working in high-paying jobs, they are able to build capital and a credit record.
But, we understand that not everyone can, and neither should they, study in STEM, or perhaps even law (the better-paying professions). Yet, the reality is that lot of degrees outside of these fields do not provide a positive return on investment. The work available for these graduates is minimal or non-existent. As a result, some governments around the world are determining what these degrees are and are discouraging students from taking them.
Not Just Financial Benefits
We also need to be aware that some degrees have value, not in the financial benefits from the job they attract, but in the knowledge itself. In the humanities, for instance, students learn to acquire knowledge, and reasoning skills, and to formulate arguments. In the university environment, there is also the opportunity to network and build relationships. These relationships might lead to business in the future. As the saying goes, “Your network is your net worth.” STEM students do not get this.
It’s risky, though, and the probability is high that it will leave the graduate out of pocket, in debt and unemployed. For the vast majority of people, certainly in South Africa, a degree that directly leads to a well-paying job is a far better bet to improve their and their family’s financial status.
Was your degree worth it? That depends on the outcome you desired. That outcome might be financial. It could also be exploring a subject of interest, expressing your creativity, enjoying your youth, or building lifelong friendships. For many, the financial outcome is a necessity and the other outcomes are a luxury.
References
[1] The Economist. “Was your degree really worth it?”. Online. Available at: https://www.economist.com/international/2023/04/03/was-your-degree-really-worth-it?itm_source=parsely-api (Accessed 6 April 2023)
