Going to university has become a bit of a contentious issue in recent years, especially in countries like the US or the UK where students are graduating with large debt burdens and face uncertain job prospects depending on the subject they have chosen.
It would be interesting to know how this trends over time, what the first derivative of the IRR slope is. I am guessing that the IRR of a university education has declined over time and will continue to do so (possibly discontinuously if there is some kind of “tipping point” moment), as it seems impossible that universities can continue to charge ever increasing tuition in a world where pretty much everything you learn in undergrad (academically at least) can be learned for free on the Internet. The entire university business model is anachronistic, as it is premised on a privileged access to information that no longer exists. The main thing keeping it afloat is the credentialing aspect, but I think the wave of closures of small colleges we are seeing is a canary in a coal mine.
In England repayments as % of earnings & Interest Rates vary depending on year the student started.
Various analyses suggest that most students should take the full loans and repay as above. In investment terms that may be best, but to avoid the Millstone it is better to pay in full when due. Either way I have sympathy for our young people who can be deceived in taking a course which does not lead to employment with incurrence of large Debt.
In the Dark Ages (1960s) we had a better system:
* far fewer went to a university
* Tuition fees paid by state plus maintenance grant (£360 pa)
* on graduation there were employment opportunities which used the skills and were interesting.
But no repayment by the student? There was: with higher rates of Income Tax I repaid the fees & grants many times over - and was pleased to do so.
The ethos was very different. Then HMGs created higher level jobs and enabled working class students to obtain them. Like many, I was the first in my family to go to a university, and I am grateful to those who enabled it. Today undergraduates are ‘customers’ for the university to make more money. We have lost family, community & society (“We”) and have atomized individuals.
I wasn't in the UK at the time when the Blair government pushed for 50% of students to go to university, which turned going to uni a commodity. And the introduction of student fees have lead to inflated VC salaries, bloated admin and taxpayers paying for defaulted loans; the whole system seems up the proverbial creek without means of locomotion.
Yes, Scott. There is an industry making money peddling pointless qualifications: an insult to the students and many excellent universities in Britain. It must end because prospective ‘customers’ are seeing through it. Now we await HMG encouraging skills training, further education for workers, and courses devised in partnership with larger companies.
It would be interesting to know how this trends over time, what the first derivative of the IRR slope is. I am guessing that the IRR of a university education has declined over time and will continue to do so (possibly discontinuously if there is some kind of “tipping point” moment), as it seems impossible that universities can continue to charge ever increasing tuition in a world where pretty much everything you learn in undergrad (academically at least) can be learned for free on the Internet. The entire university business model is anachronistic, as it is premised on a privileged access to information that no longer exists. The main thing keeping it afloat is the credentialing aspect, but I think the wave of closures of small colleges we are seeing is a canary in a coal mine.
Good morning Joachim,
once more, great stuff! 💪
That question sort of slept in the back of my head for a long time now.
I don’t know where and how you find these studies all the time but please keep it up.
Have a great weekend.
In England repayments as % of earnings & Interest Rates vary depending on year the student started.
Various analyses suggest that most students should take the full loans and repay as above. In investment terms that may be best, but to avoid the Millstone it is better to pay in full when due. Either way I have sympathy for our young people who can be deceived in taking a course which does not lead to employment with incurrence of large Debt.
In the Dark Ages (1960s) we had a better system:
* far fewer went to a university
* Tuition fees paid by state plus maintenance grant (£360 pa)
* on graduation there were employment opportunities which used the skills and were interesting.
But no repayment by the student? There was: with higher rates of Income Tax I repaid the fees & grants many times over - and was pleased to do so.
The ethos was very different. Then HMGs created higher level jobs and enabled working class students to obtain them. Like many, I was the first in my family to go to a university, and I am grateful to those who enabled it. Today undergraduates are ‘customers’ for the university to make more money. We have lost family, community & society (“We”) and have atomized individuals.
I wasn't in the UK at the time when the Blair government pushed for 50% of students to go to university, which turned going to uni a commodity. And the introduction of student fees have lead to inflated VC salaries, bloated admin and taxpayers paying for defaulted loans; the whole system seems up the proverbial creek without means of locomotion.
Yes, Scott. There is an industry making money peddling pointless qualifications: an insult to the students and many excellent universities in Britain. It must end because prospective ‘customers’ are seeing through it. Now we await HMG encouraging skills training, further education for workers, and courses devised in partnership with larger companies.