Is higher education a good investment for students?

Not too long ago, Senator Chris Evans announced an injection of $67 million in funds for a partnership between universities, schools and state governments. The rationale was simple: help more Australians achieve their goal of going to university. 'A university degree gives Australians a greater chance at getting a high paid and high skilled job' said the Senator.

The Gillard Government believes that higher education should be encouraged and says its goal is to reach its target of 40 percent of young Australians holding a bachelor's degree by 2025. That's despite experts like Tom Karmel, managing director of the National Centre for Vocational Education Research, indicating that there's a risk greater numbers of people pursuing university degrees won't get a 'good return' from it.

Yet since the government spends millions each year subsidizing education and making it easy to attend college, there are more credentialed individuals than ever before. This naturally makes getting a job after graduating more competitive than, say, in 1991 when only 8 percent of people aged 15 and over held a tertiary qualification. There is – in economic terms – potentially an oversupply of graduates relative to the number of jobs available.

While it's true that a lot depends on the particular degree you do (the arts degree, forever the butt of jokes, is probably less useful on the job market than a degree in medicine), the debate around university qualifications has raised some valuable questions. Questions like 'Is there a better way to structure our university system, a way that doesn't load students with unnecessary debt and gives them a realistic chance at getting a job down the track?'

Writers like Tony Featherstone, for example, argue that in business, a more flexible mode of education would better serve companies. Instead of the standard 3 year campus-based degree, why not allow students to gain qualifications while doing work experience and receiving on-the-job training, or why not let them enroll in a short-term or part-time course for subjects as the need arises?

It's not an exaggeration to say that the current university system promotes conformity at the expense of lateral thinking and creativity. Many of the world's entrepreneurs – take Bill Gates or Mark Zuckerberg – were college dropouts who made it big despite, or perhaps because of, their lack of formal training. University tends to compartmentalize but the real world isn't always like it is in textbooks, especially if those textbooks are written by state-funded professors whose theories aren't subject to the discipline of the market.

Chances are, in a free-market without government crutches, specializations such as 'gender studies' aren't likely to attract many paying students and will be reliant on philanthropic support to survive. There would also be significantly fewer economists pontificating about policy issues: in centuries past, economics was considered a hobby not a profession. Only those disciplines that directly relate to providing a good or service – in helping produce computers, cars, trains, or curing cancer – would find large numbers of customers willing to pay for the course.

Without government funding of higher education, there would be no taxpayer subsidized pleasant interlude of sex and parties between leaving school and beginning working life (the laid back undergraduate lifestyle which is great fun but only when not paid for by others!). Moreover, practical business skills such as administration and effective communication might enjoy a resurgence.

None of this is to say that the humanities aren't worth pursuing or that only knowledge that's commercially valuable is important.

But it's a reminder to parents, students and anyone at the beginning of their careers that further education isn't necessarily a guarantee of success or gainful employment in one's chosen field; the number of cab drivers in New York City who have degrees should be proof of that. As Michael Ellsberg points out in The Education of Millionaires: Everything You Won't Learn in College About How to Be Successful, even graduates need to learn how to market themselves.

That's a lesson that Julia Gillard would be wise to consider before subtly instilling the mentality that tertiary education is an end in itself. It's not the degree that matters – it's your street-smarts, creativity and diligence that count.