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Is your degree still worth it?

The opportunity cost of tertiary education
Published: 
Sunday, April 13, 2014

The campus is quiet for late afternoon. A group of students—a mix of business and arts undergraduates—sit under one of the big samaan trees behind the library. The same question is put to random students making their way across the quadrangle. It is a good spot because students from the different faculties are on their way to the Main Library. “Why are you doing your degree?”

 

There are many answers, but they are all variations of a theme. The common thread is the hope of a better future: better jobs; better pay and a higher standard of living. But is it that simple anymore? There was a time when a university education did mean an automatic increase in the graduate’s standard of living. The pattern held so long as the supply of degree holders was less than the demand and the economy was able to absorb and provide places for those who achieved tertiary education. 

 

By various estimates, the number of tertiary-educated people in society made up a little over one per cent of the country’s population in the 1970s. 

 

 

Opening the GATE
Subsequent policy decisions by governments, since then, have seen the number of those opting to do degrees jump to 11.5 per cent between 2002 and 2011, according to the UN’s 2013 Human Development Report. This has been fuelled by programmes like Dollar for Dollar and its successor, Government Assistance for Tuition Expenses (GATE), whose purpose has been to widen access to tertiary education. The aim here was two fold: to increase country’s skills bank while promoting social equity. 

 

GATE has had some issues. The Ministry of Science Technology and Tertiary Education is making attempts to clear up wastage and duplication within the system, but appears to have a way to go in tracking where graduates who utilise its funds eventually end up and if their education is contributing to the long-term benefit of the society.

 

With more people attaining tertiary-level qualifications, the relative value of a degree has been eroded. It no longer conveys the advantage it once did as more and more people are competing for a limited number of jobs across sectors. 

 

This means that the university graduates are spending more time unemployed after leaving tertiary institutes and are forced to accept jobs that are lower paying than graduates may have received a generation ago. Graduates are going for jobs that are not in their field or to those that do not require a university education at all. 

 

 

The situation is similar to what has been happening to graduates in Greece, Spain, Portugal and Italy since the global economic crash in 2008. Commentators in those societies have termed that situation a “youth crisis”. In the US and the UK, university students are not only contending with the depreciation in the relative value of their degree, but also with the repayment of massive student loans. Given the above, the Sunday BG is asking: is it actually worth it to pursue a university education anymore? 

 

Are the alternatives available becoming the more sensible options to chose after secondary school? And, just what are these alternatives?

 

 

Opportunity cost defined 
The term “opportunity cost” is hardly used by anyone but economists. It becomes important, though, when discussing the worth of a tertiary degree currently as well as the choices open to graduates. The opportunity cost of tertiary education is the alternative or choice not taken in order to pursue it. So for the average person, the opportunity cost of a tertiary education may be income lost by not taking a job as they earn their degree. It may also be the inability to acquire work experience and career networks.  

 

 

Four graduates
Melina, Rajesh, Patricia and Sally are all people who have sacrificed years of their time and much of their own money to earn their qualifications. Melina has a doctorate in development economics from Michigan State. Rajesh has recently completed the professional certificate from Chartered Institute of Purchasing and Supply (CIPS). Patricia has an MPhil in marine biology and Sally has a law degree. Their stories are as different as their fields of study. Just as different are the outcomes.

 

 

By far, Melina seems to have had the hardest journey. In her late forties, she has found herself chronically under or unemployed since returning to Trinidad 13 years ago. Her doctorate did not open the doors she thought it would. She thinks, in fact, that her foreign doctorate and employment experience actually work against her, intimidating the people who have interviewed her for jobs. 

 

She sees T&T as a society governed by cliques, where contacts are necessary to get even the smallest jobs. For money, she rents her car out. Sometimes, she also makes loans out of her savings and charges interest on the principal. She gets by, living with family.

 

Melina does not regret the experiences as a tertiary student but, throughout the interview, seemed deeply disappointed that she was not able to use her education to impact the country more positively. And even though she has made her peace with her current circumstances, this was not what she thought her life would be when she started university 25 years ago.

 

“I feel as though I’ve set myself apart to the point where I cannot relate to other people and I feel like my exposures and my travels, programmes that I’ve done, the brain that is created, makes me so much alienated from the general population its painful.”

 

 

Rajesh is a friend she brings along. In his mid-thirties, he shares that he has been able to find lucrative work since getting his Chartered Institute of Purchasing and Supply (CIPS) certificate. It becomes clearer why as he explains. Rajesh was able to get work experience in procurement and, liking the field, decided to get a recognised industry qualification.

 

 

His time on the job and qualification make Rajesh an in-demand commodity in an economy where people with procurement knowledge are increasingly necessary. He thinks Melina’s advanced degrees hinder her as he remarks there are only so many vacancies where PhDs are required.

 

 

Neither of them know Patricia. Also in her mid-thirties, Patricia did her undergraduate degree in biology and her MPhil in Marine Biology at UWI Mona. Her dream was to work in a lab. She able to get work at one environmental company, but was downsized as the recession deepened in 2009. Since then, she has worked as an administrative assistant at an engineering outfit and an accounting firm.

 

 

Her latest job is radio news production. She appears resigned to making the less than $6,000 a month salary, grateful that, at least, she has a job. Even though it did not pay off financially, she definitely thinks her time at university was worth it because “learning how to think and learning how to think for yourself are valuable.”

 

 

And then there is Sally, who inexplicable turned her back on a potentially lucrative career in law. She realised something was wrong during the second year of her degree, but completed the programme anyway since she was so far along. A job at a prominent law firm revealed how wrong a fit the field was.

 

“I had joined the firm thinking I would help people, work with people who could not afford a lawyer. But at the firm they did the exact opposite. My job was to run down people who owed the firm money. People would come to the office and cry.” 

 

She says her mother’s death was an awakening, forcing her to realise that life was too short to be spent doing something she hated. An inheritance would give her the space to explore what truly made her happy. She started writing ad copy, then moved on to television production and finally found her niche in photography, where she now makes a comfortable living.

 

 

Three economists
The Sunday BG put the graduates’ circumstances to economists and lecturers, Dr Roger Hosein, Dr Lester Henry and Hadyn Blades. They agreed on some points, disagreed on others, but generally thought a university education was still a sound long-term investment for both individuals and societies.

 

Dr Hosein said: “Let us assume that the random person with five CXC subjects obtains a job at a salary of $6,000 a month, which cumulatively after eight years results in gross earnings of $576, 000. “If the same student were to attend university for three years and postpones income for those three years, but thereafter having attained a degree earns $10,000 a month or $600,000 after five years, then the long run gains for the university graduate outweighs the short term sacrifice of income.”

 

Attempts were made to get information which would outline a breakdown of a university graduate’s earning potential at the start of work, over a 10 to 15 year-period. Checks were made with the University of the West Indies, the Ministry of Science, Technology and Tertiary Education and the Central Statistical Office.

 

 

While these organisations did have some figures on how many graduates were leaving institutions with a breakdown of degrees by subject area, there was little analysis of individuals’ earning potential by subject area either fresh out of school or over any period of time.

 

Attempts by the Sunday BG to conduct informal research on incomes earned by graduates appear to bear out Dr Hosein’s illustration. Some 20 graduates were broken into the categories of natural sciences (biology, chemistry, physics), medical sciences, engineering, social science (sociology, psychology etc), humanities/arts and business (management, administration, marketing, HR etc) and law.

 

It was found that, on average, the sciences and engineering grads had the highest initial earning potential, although this levelled off over a 10- to 15-year period. Business and law graduates appear overall to have the greatest income earning potential over time, even though their initial incomes were lower than science and engineering degree holders. Graduates with social science and humanities qualifications appeared least likely to find work in their fields and, overall, they also seemed to earn the least over time.

 

However, even if they were absorbed into the teaching service and public sector at large, their initial incomes and earning over time still outstripped their colleagues who did not have degrees. When asked why having an advanced degree seemed not to help Melina for example, Dr Henry, who is also an Opposition Senator, was frank. “First to begin, people here are not going to kneel before you because you have a masters or a doctorate.”

 

He advised that people with advanced qualifications have to be persistent in a society that expects them to “pay their dues.” He also explained that the higher up the educational ladder one goes, the less likely it was to translate into a larger pay check. He and Dr Hosein also see the spill-over effects to society of an increase in university students fuelled by the GATE programme as being positive in the long run. “People will generally be better behaved,” says Dr Henry.

 

Several foreign studies come to the conclusion that university graduates are less of a drain on a country’s resources as they are less likely to access social services for the needy. They are also less likely to commit crimes or engage in other disruptive behaviour. They are also more likely to contribute in taxes over a lifetime because of their higher incomes. Their presence, in general, indicates a higher standard of living and empowers societies with the ability to transform themselves through their earned skills. 

 

Dr Hosein credits UWI as being integral in this country’s and the region’s development and cannot see any major gains happening in the region without UWI graduates. Even though he recognises the long-term benefits of tertiary education, Hadyn Blades, says these benefits are not automatic. “A tertiary education is really all about what you do with it.” 

 

Blades believes that a degree is supposed to enable the holder to be a better thinker, a “disruptor” of the status quo. He thinks too many people are signing up for degrees because it will augment their resumes and job prospects. Instead, he says, “they should have greater force and deeper understanding of what is required to improve the quality of life.” 

 

He doesn’t believe we have arrived at this point yet and believes until individuals begin to show a willingness to “think, create, discern and disrupt, society will not be able to experience the true transformative power of a tertiary education.” 

 

 

Graduate Area of Study    Public Sector    Private Sector    Public Sector    Private Sector
            (10-15 years)    (10-15 years)

Medical Science    $16,000    ---    $20-30,000    Upwards of $35,000
Engineering    $7-10,000    $10-$15,000    $18-20,000    $30-$60,000*
Nat Sciences    $5/6,000    ---    $14-$28,000    ---
Law    $7/8,000    $ 7/8,000    $25-$35,000    $30-upwards of $100,000
Business    $7/8,000    $7/8,000    $25-$35,000    $40 - upwards of $100,000
Humanities/Arts    $7/8,000    ---    $14-$25,000    ---
Social Sciences    $7/8,000    ---    $14-$25,000    ---

The figure quoted represent monthly salaries 
Sectors where an estimation of salaries could not be obtained were left blank
Estimations were made with the assistance of professionals in the respective fields