Re-Evaluating University Degrees

Re-Evaluating University Degrees

An acceptance letter to a university undergraduate degree program is generally seen as the most successful conclusion to high school. I’m not trying to say that getting accepted to university is insignificant or that it isn’t a sign of success. What I’m suggesting is that it isn’t necessarily a given that every undergraduate degree is a smart investment in one’s future.

With any investment, we’re open that over time, we will see an increase in value. For a university degree to be a successful investment, graduates want to see a boost in earning potential greater than the cost of the degree, lost wages (income you could have earned instead of being in school), and value for the time spent in class and studying.

Graduates want to see a boost in earning potential greater than the cost of the degree, lost wages and value for the time spent in class and studying.

 

How much does it cost to go to University

According to an April 2018 article by Maclean’s, the average Canadian student spends $9,300 per year if they are living at home.  Students who move away for their undergraduate degree tend to spend more than double, spending closer to $20,000 per year.

Most undergraduates take four or five years to complete their program, meaning that students staying at home will spend between $37,200 and $46,500 for their degree. On the other hand, those who move away will spend on average, between $80,000 and $100,000 for their degree.

The real cost of university degrees is likely much higher for many students who use student loans to help pay for their education, depending on how big the student loans balance is, how long they take to pay down their debt, and what interest rate they are paying.

All university undergraduate degrees aren’t equivalent or equal.

The average cost is just that, an average cost. Some programs or universities are going to have higher or lower tuition. Depending on what university is being considered, the cost of living can also vary widely.  Similarly, undergraduate degrees offer a range of career earnings potential.  On one end of the spectrum, there are vocational degrees that act as certifications themselves that more or less lead directly to employment. For example, a Bachelor of Engineering, Nursing or Education.  At the other end of the spectrum, are degrees from the humanities (such as BA, BFA, BMus).  These degrees tend to focus more on developing a student’s critical thinking and knowledge rather than career or job-specific training.  However, graduates – in varying degrees – still need to take that skill and knowledge and create employability, an income or a career out of it.  For example, a violinist graduating from an undergraduate music degree in performance would have had the opportunity to develop their musicianship during their studies, but still would need to win an audition for an orchestral position.  An undergraduate music degree produces musicians with abilities, but music graduates frequently need to build their careers themselves after graduation.  Graduates from degree programs on this end of the spectrum who are unable or struggle to create an income from these skills are then left with an expensive degree with limited value for them or the option of continuing their education as graduate students.

This isn’t intended as a comprehensive list or a recommendation for (or against) any particular program.  At the end of the day, I believe that everyone needs to find their own path and niche.  The intent of this post is not to encourage all prospective undergraduate students to go into vocational programs or to discourage applications to humanities programs.

If one goes into a field with high earning potential that they hate, what value is that career and lifestyle to them?  They would be in a better financial position but are likely to be miserable.  Likewise, is a 4-year $40,000 or $80,000 Bachelor of Fine Arts Degree worth it if graduates are not able to find jobs with salaries commensurate those costs?  If not, then it’s the skills, knowledge, and experience that are valuable to those students.  If so, is there a more cost-effective way of acquiring those skills, knowledge, and experience outside post-secondary institutions?

With such a high cost, undergraduate degrees better be worth it, right?  University educations are seen as an investment in our future with very high costs, so the decision to enter a degree should be a very deliberate decision.  In my mind, there are two important question to answer: 1. What does your degree get you and is it worth the cost?  and,  2. Is this something that you want?

1. What does your degree get you and is it worth the cost? 

2. Is this something that you want?

Why do we automatically assume that a university degree is the next thing to do after high school?

Because, in a couple decades ago, it was!  It goes without saying that a couple decades ago when the baby boomers were reaching adulthood, the world was a different place.  University degrees had a much higher value for two principal reasons.  Generally, a degree of almost any kind all but guaranteed improved job prospects and potential earnings.  Further, the gap between the cost of these degrees and the income that university students could generate in entry-level positions over the summer was much smaller.  It was possible to earn enough in the summer to pay for the next academic year’s tuition and living costs.  This meant that most university students didn’t need to take on any debt, to complete a university degree.  University degrees were that much more valuable because they cost less, and they got you more.  Back then, it made so much more sense to get any university degree.

I’d argue that the environment has changed, but the mindset has not.  Today, overall job prospects are not as good and tuition has increased at a much higher rate relative to minimum-wage, making university degrees much more expensive and harder to finance.  The cost of attending university have risen more than inflation.  As a result, “about 67 percent of Canadians included in the poll said they had debt when graduating, and were an average of $22,084 in the red.”

67% of Canadians … had debt when graduating, and were an average of $22,084 in the red.

The idea that every undergraduate degree is a good investment is a fallacy.  Though it is possible that the non-financial benefits of a university degree hold value.   If you are evaluating a possible university degree from this angle, it’s a different discussion. We’re no longer looking at it as a financial investment in improving earning potential but looking at paying for the experience.  If that’s the case, one begins to value a university degree the same way they would a vacation or gap year – based off of the memories and experience.  Just as it would be very irresponsible to book a vacation that you are unable to pay for, it could be foolish to go to university for a degree that holds limited value for you.

The idea that every undergraduate degree is a good investment is a fallacy. 

I’m not advocating for going to university or not going to university.  I’m not suggesting that students should only aim for professional or vocational programs or that they should avoid liberal arts degrees.  Like personal finance, the decision of going to university, or not, is a very personal decision.  With the onerous costs of post-secondary education, it should be a very deliberate decision.

Whatever high school students decide to do after graduation, have a plan!

It could also mean: “I have no idea what I want to do with my life and that’s OK, so I’m just going to work for a year instead of spending $6,000 on tuition.”

If you’re curious about a field, this could mean: “I’m not sure what I want to do yet but I find this interesting.  I’ll apply for entry-level positions in this field to see what I think.  This would give me the advantage of saving some money for school (if it’s necessary) and will give me a better idea of whether I actually want to work in this field.”

It could also mean: “I’m going to go to do this degree because it’s a field or subject that I’m passionate about.  I don’t know what I want to do with it, but I’m positive I want a career working in this field.  I will need to take out a student loan, but this will be an investment in my career.”

It could be that the financial obstacles don’t apply to your situation.  For example:

“I’ve diligently saved up a lot of money working a part-time job through high school.”

“I’m fortunate that my parents saved money in an RESP for university.”

“I was fortunate to receive a major scholarship.”

In this situation it could be that: ” I’m not sure what I want to do, but I have this opportunity to go to this university to explore a couple of interests.  Since I’m not sure what I want to do, I’m only planning to go for one year and I will re-evaluate before going continuing.”

Or, it could be some combination of all of these scenarios.  Of course, plans never survive first contact with the enemy – plans are meant to be changed.  But at the least, having a plan will reduce the number of university graduates with a degree that does not help them get ahead and student loan debt that has set them back.

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