It’s time to reconsider going to uni

By Leith van Onselen

The Australian’s Judith Sloan has produced a good article questioning whether Australia is churning-out too many university graduates, leading to poor job prospects while placing great strain on the federal budget:

The clear message now is that everyone should aim to complete Year 12 and most young people should ­aspire to university studies. We are told that we are a knowledge ­nation and we all need to get with the program, particularly science, technology, engineering and mathematics.

The truth is that this simple message is highly misleading; there are plenty of jobs that don’t require university study. And some jobs that do require a uni­versity qualification are examples of wasteful credentialism. Once upon a time, these jobs didn’t ­demand Year 12 but provided on-the-job training…

Just take a look at the figures. Between 2009 and 2014, enrolment in bachelor degrees rose by 26 per cent and in masters degrees by 41 per cent. And the proportion of new bachelor degree graduates in fulltime employment is close to a historical low…

The obvious question is: are our young people too often sold a pup by being given the advice that university education is a necessary prerequisite for a successful ­career?..

Given the shift to demand-driven enrolment, even students with marginal academic ability can now find a university to take them, even though the degree may be of poor quality and they stand a high chance of dropping out.

And while they will carry the burden of a HECS debt for the ­period of their enrolment, the taxpayer will pick up the tab until the time they earn enough to start paying the debt back. It is esti­mated by the Parliamentary Budget Office that up to 20 per cent of the student loan book will have to be written off.

It is surely time for the government to abandon the costly system of demand-driven university enrol­ment and for young people to be given accurate advice about their real prospects in the ­labour market.

I too have complained incessantly that Australia’s universities have turned into ‘degree factories’, whereby they teach as many students as possible to accumulate Commonwealth government funding through HELP/HECS debts. At the same time, quality of teaching, and students’ ability to secure subsequent employment, remain distant priorities.

This view is evidenced by the escalation of total outstanding HELP loans, much of which will never be repaid, putting increasing pressures on the federal Budget:

As well as the dramatic lowering of university entrance scores, suggesting that every person and their dog can now enroll for a degree, devaluing their worth.

Indeed, the Department of Employment’s latest skills shortages report showed there were a record 1 million domestic students enrolled with a higher education provider:

However, bachelor degree graduate employment outcomes are falling and are at “historically low levels”:

So there are clear problems with Australia’s demand-driven university system, which has grown in cost but is delivering poorer outcomes.

This view was reinforced by the Productivity Commission’s (PC) final Migrant Intake into Australia report, released in September, which contained some worrying data highlighting the deterioration of university graduate outcomes, whereby achieving stable and well-paid employment has become increasingly illusive:

Education does not guarantee employment, and evidence suggests that it is becoming harder for recent graduates to find a job on completion of their education (Reserve Bank of Australia 2015). For example, the share of higher education graduates in full-time employment four months after graduation fell from 85.2 per cent in 2008 to 68.1 per cent by 2014 (figure D.3).

The 17 percentage point fall in the share of recent graduates in full-time employment from 2008 to 2014 has been matched by an 11 percentage point increase in the share of recent graduates in part-time employment and a 6 percentage point increase in the share of recent graduates not working.

Graduate starting salaries have grown more slowly than average earnings over a long period. In 1977, median starting salaries were equal to male average weekly earnings. By 2014, median starting salaries had fallen to 74 per cent of male average weekly earnings (figure D.4). This has coincided with an increase in the share of the population with bachelor degrees, from 5.8 per cent of the population in 1982 to 24.1 per cent in 2014.

As the supply of people with tertiary qualifications has increased, the market return on a qualification may have decreased…

New research from the National Institute of Labour Studies at Flinders University also showed that between 2008 and 2014, the proportion of new university graduates in full-time employment dropped from 56.4% to 41.7%.

My advice to young people is to consider ditching university for a trade.

The Department of Employment’s latest skills shortages report showed that “skills shortages” are far more widespread for technicians and tradespeople:

Because they are experiencing relatively few commencements and completions:

Therefore, if you are not necessarily academically minded, and you want to improve your job prospects, look at taking on an apprenticeship or going to trade school.

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