Is higher education worth the expense?

The world over, more and more people want higher education. Is it worth it? The Economist attempts to answer this question.

It's certainly worth it for students-a bachelor's degree earns a return of 15% on the average in the US, despite escalating costs of higher education.  But does society benefit?  This is not as clear. Why? Because- incredible as it may sound- the best universities may not be adding value to their students. How do we know this? Through poor student scores on tests and the testimony of employers.

We have this state of affairs because leading universities focus on research and neglect teaching. Top professors don't want to 'waste' time on teaching when their professional rewards are linked to publishing papers. The work is delegated to adjunct faculty and research assistants who deliver indifferent material to overcrowded classrooms (since universities want to maximise fee earnings).

If so, why do employers hire the products of higher education? Well, not for what they learn but for their innate talent. Education is valued for its signalling value- if a student has made it to a good schools through a selective process, he or she must be good. Not because it makes the student more productive. In other words, the enormous amounts that students and universities spend on a degree is money down the drain.

Those of us who are at B-schools will not be shocked by these propositions. Employers have been hiring from, say, the IIMs not because they see the IIMs as adding much value but because the IIMs are highly selective. (I mention IIMs only by way of illustration- the same is true of the top B-schools elsewhere). Students coast through the two years, focusing more on placement and networking, perhaps because they believe that there's nothing much to be learnt anyway. Mind you, it's not that B-schools don't add any value- if so, employers should hire from the admissions lists, they should not wait for those who have been admitted to go through two years. But neither students nor employers think that the value addition is substantial.

What can we do about this? How do we ensure that higher education adds value. The Economist has useful suggestions:

More information would make the higher-education market work better. Common tests, which students would sit alongside their final exams, could provide a comparable measure of universities’ educational performance. Students would have a better idea of what was taught well where, and employers of how much job candidates had learned. Resources would flow towards universities that were providing value for money and away from those that were not. Institutions would have an incentive to improve teaching and use technology to cut costs. Online courses, which have so far failed to realise their promise of revolutionising higher education, would begin to make a bigger impact. The government would have a better idea of whether society should be investing more or less in higher education.

I would go further. Schools should track a sample of their products through their careers for, say, five years after graduation. They should seek to ascertain from employers whether they perceive value addition from these products, whether employers see students as having benefited from having gone through a graduate programme. This feedback can be used to modify school curricula. We also need to find ways to incentivise better teaching, say, by linking rewards to ratings of faculty by students.