No matter what yardstick we use to date the founding of the world’s first university, and there are several different yardsticks, that university will be at least 1000 years old. But most parents wouldn’t care as long as the one they chose stayed in business long enough to confer a degree on their child. To their credit, universities are so deeply ingrained in society that they’re perceived and used as four-year extensions to high school. Parents assume that admission will be automatic and that a permanent, full-time job will be waiting the day after commencement. That kind of faith precludes red flags among the answers to the questions at the bottom of this page — assuming they’re asked and answered.
That was the gist of a 2014 report in The Guardian newspaper on the results of an HSBC survey of 4500 parents in 15 countries, Canada and the U.S. among them. There might have been an element of truth in those assumptions, but none would come close to covering 100% of graduates. Except for one: someone has to earn the money that pays for admission. If loans are involved, they have to be repaid. In Canada, the value of such loans stands at upwards of C$16 billion. In the U.S., the number is in excess US$1.3 trillion. Seven million U.S. students have defaulted at least once.
The HSBC survey reported that:
- “There isn’t always a lot of support for parents who are concerned about their children’s education and finances. It can be daunting for people to organise finance for university.”
- “Some parents overestimate what their children are likely to earn when they graduate and if young people struggle to find a job when they graduate it can cause extra pressure.”
- “Recent research has also suggested that many of today’s students will still be paying their student debts when they reach their 50s.”
- “Nearly nine in ten of those surveyed want their children to go to university, with over seven in ten parents in the UK expecting their children to study at degree level. More than a third of those surveyed believe a university education should offer access to opportunities in life.”
- “The survey release follows news that starting salaries have dropped by 11% to £21,702 since 2007-12. The overall value of a degree has also been cut by up to a third in 5 years, according to research, with the earnings ‘premium’ gained by graduates in skilled jobs having declined since the economic crisis.”
Dr. James. D. Duderstadt believes that there will always be a demand for university graduates. He’s in a position to know. He’s President Emeritus and University Professor of Science and Engineering at the University of Michigan. In his remarks to the Emory University Futures Forum in Atlanta on March 8, 2005, he said:
“The university is one of our civilization’s most enduring legacies. Clearly, in an age of knowledge, higher education will flourish in the decades ahead. In a knowledge-intensive society the need for advanced education and knowledge will become ever more pressing, both for individuals and for our societies more broadly. Yet, it is also likely that the university as we know it today, or rather the current constellation of diverse institutions that comprise the higher education enterprise, will change in profound ways to serve a changing world. But of course, this is just as the university has done so many times in the past.
“We have entered a period of significant change in higher education as our universities attempt to respond to the challenges, opportunities, and responsibilities before them. From this perspective, it is important to understand that the most critical challenge facing most institutions will be to develop the capacity for change. As noted earlier, universities must seek to remove the constraints that prevent them from responding to the needs of a rapidly changing society. They should strive to challenge, excite, and embolden all members of their academic communities to embark on what should be a great adventure for higher education. Only a concerted effort to understand the important traditions of the past, the challenges of the present, and the possibilities for the future can enable institutions to thrive during a time of such change.”
The demand Dr. Duderstadt referred to won’t apply to every graduate. To find work, students have to satisfy the demands of employers based on what universities can or will deliver. He pulled no punches about the fact that universities are businesses. As such, they’re subject to the laws of economics and the vagaries of the global economy, politics and competition. Funding is one of those vagaries. Government support to universities is plummeting even as their cost of doing business continues to rise. To compensate, they’re raising the price of their product, as businesses do, and cutting corners wherever they can, as businesses do. Dr. Duderstadt and his audience understood the ebb and flow of university and economic fortunes because their historical perspective demanded it. Planning for the future of their respective schools is critical. It’s just as critical for students whether they sign up for a 4-year bachelor’s degree or something more ambitious.
In 2012 an estimated 100,000 to 300,000 graduates in Canada saw the value of the degrees they had paid good money to earn drop to zero when they were offered and accepted work as unpaid interns. The jobs they failed to find in their “chosen field” were never there to be found. Had they and their parents done their due diligence they might have discovered early on that their plans for leveraging post-secondary education to find work were out of sync with the opportunities the labour market had to offer. They would have had time to make alternate arrangements.
The University of Toronto’s website devotes a page to spelling out that 2016’s tuition, fees and other expenses will set parents and students back C$8,000. Prices vary by discipline, but it takes 4 years to earn a bachelor’s degree, more if students live in residence or are from out of province. The media continue to report that graduates are still agreeing to work for nothing. If another 100,000 to 300,000 graduate in 2017 without finding paid employment, they will have invested between C$3.2 billion and C$9.6 billion in educating themselves. Those amounts don’t take into account the graduates who will find work that pays.
Universities sell higher education at full retail and their graduates resell it at full retail, or should. When graduates can’t apply what they’ve learned, or have to discount heavily when they sell it as they did in 2012 — and still are in many cases — neither they nor society get their money’s worth. Post-secondary education has to generate positive returns for all of us.
Personal Due Diligence helps families develop the necessary perspective to plot where on the map of Canada or elsewhere their children’s ambition, aspirations, education and opportunities will intersect because that’s where they’re going to make their education count. To learn how we do it, click here. To find out whether the commitment you’re planning to make is likely to net the employment result you intend, please answer these 8 questions:
- How long has the line of work they want to enter been in existence?
- Did they make their decision: (a) On their own? (b) With your or someone else’s assistance/encouragement? (c) Both?
- Which best describes the state of health of that line of work since 2011? (a) Growing. (b) Shrinking. (c) Unchanged.
- Between now and the time your children graduate will demand for people in that line of work: (a) Grow? (b) Shrink? (c) Remain unchanged?
- List the names and country of ownership of the top 5 employers in that line of work in descending order by sales or headcount since 2011.
- In the last 5 years, which of those employers have moved part or all of their operations either into or out of Canada?
- Which of those employers have changed ownership since 2011?
- What information did you use to answer questions 3 through 7? Where did it come from? How current is it?
In a perfect world, none of the answers to those questions would be flagged. But in the real world, some probably will. If some of yours did and you’d like to talk about them with us, please call or write. There will be no charge for that discussion, and any information you share with us will be held in strictest confidence.
Founder & President
Personal Due Diligence
+ 1 905 273 9880