Is Higher Education A Scam?

With the advent of the internet, a lot of our social systems have undergone transformation. However, our educational system remains as one of those that has been slow to transform. What has changed the least is how expensive higher education is when it comes to the top universities of the world. Therefore, it begs the question, is higher education a scam these days? Let’s find out.

Cue in COVID-19

It wasn’t until the situation with the corona virus forced the educational institutions, that they started embracing the concept of online learning. Once they started offering courses online, many university staff also started offering recorded courses. Students started questioning themselves at this point whether this form of education is worth as much as they were paying. Slowly, the world started opening its eyes to a much larger fact: Was this ever worth as much as they were paying?

This essay is supported by Generatebg

Top Universities Are Brands

You’d think that brands are associated with companies like Nike, Red Bull, Hugo Boss, etc. But if you observe closely, the top universities of the world are, partly, well-built brands. It is clear on the one hand that they have built close ties with relevant industries, and offer well established research infrastructure. But on the other hand, what is it that drives the cream of the best students to top universities? The answer might sound a lot like ‘reputation’. If the reputation starts falling, the brand value starts falling as well. If the quality of the students goes down, eventually, the brand value goes down as well. This knowledge doesn’t affect the decision of a typical student for his or her higher education a lot, but it is worth being aware of this situation.

Top Brands Charge Top Fees

Taking the United States as a sample that contains a fair number of the top universities in the world, below you can see the increase in tuition fees relative to 1990-91. There could be an argument that over time, monetary inflation has to be taken into account. Therefore, the data presented below is inflation-adjusted:

Furthermore, you can find below, the percentage increase in fees over the last three decades (also inflation adjusted):

These statistics clearly show us that educational institutions here have been operating as thriving business organisations. One could ask the question: “Where does the profit go?” Some of the profit goes into improving university infrastructure. But the rest of it goes into “Endowment Funds”, which are basically glorified wall-street-like investment companies that employ some of the best money managers on the market. For instance, Yale University’s endowment fund is led by David Swensen, who is the inventor of a complex instrument called “Swap”. Prior to Yale, he worked for Lehman Brothers, which went bust in 2008 ironically due to swap miscalculations (not Swensen’s fault).

In any case, university endowments are treated lightly by the government when compared to wall-street investment firms. So, they make money more easily, making the universities richer. This begs the next question: if such universities are making more than sufficient profits on investments, why do they continue increasing tuition fees, thereby encouraging student debt?

The Online Treasure Trove

As far as theoretical education is concerned, the best sources of education are available online. This is becoming more of an undisputed fact by the day. The sheer number of independent inventors that show up on YouTube, and show the world how it’s done is not only refreshing and inspiring, it questions the very fundamentals of our educational systems, and exposes the universities over-charging for merely structuring subject course material and packaging them as degrees.

There have been companies that have popped-up that aim to exploit this market gap by offering mini-online-degrees at a fraction of the cost of what the conventional universities offer equivalent courses for. In addition, there are now other upcoming innovative online educational platforms that aim to revolutionize the way education is done.  Examples of the super-set of such online educational companies would be Udemy, Coursera, Brilliant, Skillshare, Byjus, etc.

Is Higher Education A Scam?

Not exactly. What we have established so far is that the top universities are very likely over-charging for what they have to offer. So they aren’t exactly what I would call a scam. But it is unethical to say the least.

Having said that, I myself have a higher education degree from one of these so-called top universities.  While it is true that I likely over-paid for my degree, I also had access to infrastructure and practical equipment that I could never have been able to afford. So, when it comes to the choice of higher education, one has to weigh in the practical aspects of it as well. For professions that involve a lot of practical training such as in the case of medicine, bio-chemistry, micro-biology, electrical engineering etc., it makes sense to study in a university that offers the resources to learn the skills robustly. One also needs to factor in that the quality of co-students makes the whole deal a bearable, or in best cases, a pleasurable experience. Therefore, the practical and social aspects make a strong case for universities (just universities though; not necessarily top universities).

On the other hand, it still does not justify the exorbitant tuition fees that the top universities charge. It boils down to how one wishes to split his or her education. If one is clever about it, one could learn the practical aspects by associating / interning with institutes, do the theoretical learning online, and get his or her knowledge certified by examinations conducted by accredited bodies. This strategy is likely far cheaper than and almost just as effective as the former case. For fields such as computer science or information technology, it makes no sense to me to pay huge fees, as the access to practical equipment in these fields costs next to nothing compared to the fees charged versus the quality of education available for free on the internet. Employers are also awakening to the fact that some of the best talent available in the market has come from unconventional means of education.  Top employers outside of the tech industry don’t seem to want to embrace this fact, but there are start-ups exploiting their inertia, and are growing exponentially by employing such talents.

One thing is for sure: the transformation of our education systems is just beginning.

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