Source : THE AGE NEWS
I often debate with my university friends whether the debt and opportunity cost of going to university was worth it, especially now that the rise of non-degree workers is impossible to ignore.
Recently, a friend I hadn’t seen since high school pulled up to our running club in a brand-new Mercedes. No surprise, he went into real estate. Another casually mentioned dropping $500 on a night out at Crown. You guessed it, he’s a sparky.
Enrolment rates for domestic students began to plateau in 2016 and have recently started to fall sharply.Credit: Oscar Colman
It makes me wonder if I were finishing high school today, would a university degree offer the same clear-cut value proposition it did a decade ago? Why spend years studying when you can make six figures in construction straight out of school.
In Australia, construction wages have outpaced the broader economy over the past decade as a result of increasing labour shortages, mirroring trends in the US, where blue-collar workers have seen significant wage gains post-pandemic.
“The median income of men in their 20s with a vocational qualification is higher than for those with a bachelor’s degree,” says Andrew Norton, a professor of higher education policy at Monash Business School.
But he adds: “Income growth in trades tends to stall in their 30s, while it continues for graduates.”
According to The Wall Street Journal, young Americans are increasingly choosing trades over higher education, perceiving that they offer better job prospects in a future where artificial intelligence threatens white-collar graduate roles. Some employers are now offering highschoolers $US70,000 ($107,000) jobs to take up a trade.
Increasing economic uncertainty and fears of recession are also causing companies to retain existing workers longer, while reports from the UK and US reveal graduates are struggling to find work as entry-level positions disappear.
Roughly half of US college graduates are now ending up in jobs that don’t require a degree. Even Harvard MBAs are struggling to find work.
“AI will likely perform many of the tasks that graduates typically do, while doing them more efficiently,” says Norton. “It’s early days, but there does appear to be a trend emerging towards vocational training over university,” he says.
‘Unfortunately, there’s no empirical evidence on the value of university friends and networks.’
Andrew Norton, a professor of higher education policy at Monash Business School.
Meanwhile, US President Donald Trump’s attack on Harvard, and threats to redirect its funding to trade schools only makes the higher education path seem a higher-risk proposition.
“Degrees were traditionally seen as a low-risk path. Now there’s a risk that we’ll see a major shift in how the economy recognises skills,” says Max Yong, an economist who specialises in education policy, pointing to the growing trend of hiring based on skills rather than credentials.
The trend away from higher education is already visible in Australia. Enrolment rates for domestic students began to plateau in 2016 and have recently started to fall sharply. They are now back to levels not seen in over a decade, and international students are taking up the slack.
“On average, university degrees are becoming less valuable as the supply of graduates pushes down wages. I call it ‘qualification inflation’,” Yong says.
Trades are becoming an increasingly popular option.Credit: Paul Jeffers
“If you had a degree as a Boomer, you got it for free and were automatically in demand. Now, with so many graduates, you need postgraduate qualifications or significant work experience to stand out.”
In 2023, a report by the McKenzie Research Institute found the income premium from a university degree in Australia was falling as universities churned out more graduates than there were jobs. Similar trends have been reported in the UK.
“Better options in full-time work or vocational education could explain why there has been a trend away from higher education in recent years,” Norton notes.
You don’t need a university degree to become an influencer, start a business, or host a podcast, increasingly popular career paths among young people.
While these trends weaken the economic argument for university, as someone who’s spent most of their adult life in higher education, viewing it purely as a financial investment misses the forest for the trees.
To me, university’s real value isn’t in career advancement; it’s as a passport to explore the world. The opportunity to debate at the Cambridge Union or study across the hall from Salman Rushdie’s office at NYU, the friendships built across continents, are experiences I can’t measure in dollars.
“I decided to undertake further study to gain new specialised skills, broaden my horizons overseas, and meet interesting people in my field,” says Yong.
Says Norton, “Unfortunately, there’s no empirical evidence on the value of university friends and networks”. But he agrees “they have been immeasurably valuable for me, both in career terms and in friendships that have now lasted decades”.
So, rather than viewing higher education as a financial investment, maybe it’s time to see it as what it’s increasingly becoming: a cultural passport to explore the world, something AI can never replace.
If you can afford it, and particularly if you can study internationally, it’s worth more than a hundred Mercedes – my back-up real estate licence plan notwithstanding. They’re not mutually exclusive, anyway.
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