Opinion: Societal delusions about America’s university systems

For many, college is an enormous financial obligation. As of early 2020, there are 1.6 trillion dollars of outstanding student loan debt in the United States. With such an enormous rap sheet, it would seem that our society places a huge emphasis on college education. Unfortunately, however, this emphasis might be slightly misdirected as there are some serious problems surrounding the university system, on both the individual and societal levels. 

Many individuals go through college and rack up enormous debt without rationally considering why they are pursuing a degree, and there are numerous ideological superstructures that lead people down this deceptive route. 

Why do people go to college at all? Peter Thiel, founder of PayPal, discusses the economics of college education in a lecture at the John F. Kennedy Jr. forum. He notes that there are several ways that people view college as an economic product: first as a consumption good, as an investment good, and lastly, as an insurance policy. Thiel argues that the insurance policy model is the most realistic out of these options because, in the modern age, it is not necessarily that a diploma guarantees a great job but, rather, protects against homelessness.

Regardless, at least two out of these three ways higher education is viewed pertain to one’s economic situation. Therefore, to understand the potential value of a diploma, we need to understand what makes a diploma economically viable and eliminate the myths surrounding the idea.

Our society likes to frame college through the lens of education, but the reality is that what one learns in their classes is often inconsequential at the undergraduate level. This is because the purpose of a degree is not to actually learn but to signal that you are smart enough to get into certain universities or to graduate. 

It is colloquially assumed that the prestige of one’s university determines the value of one’s degree, but this is largely only true at the apex. Lisa Ward of The Wall Street Journal points out how major choice has a greater return on investment than school choice. There are salary differentials across the same major between different universities based on ranking, but the general factor of economic earning ability is subject to study. 

Therefore, in order to understand whether a degree is worthwhile, we need to understand the concept of marginal utility. Marginal utility is the incremental value produced by putting more into an investment. It’s the difference between the amount of residual income generated by an $100 investment versus an $101 investment.

If you get into a top ten university, the additional tuition you pay will likely justify the enormous benefit you’ll receive through the university’s brand value, but does that same logic hold true throughout the entire college ranking structure? I am very skeptical. After a certain point, the value of one’s degree is dependent almost entirely on how a student hedges his university’s resources and networks outside of class. 

My personal philosophy is that if someone doesn’t get into an elite university, they ought to study at the cheapest place they can find that provides the highest marginal value. However, society’s largely false sense of rank-based differential value leads people in the opposite direction: they make poor financial decisions because they are not framing the degree as a financial good anymore, they are framing it as a social good.

This stems from a larger cultural issue, however, namely the overwhelming fixation our society has on college. From the time I was young, I, like many of my peers. was told that I needed to go to college. I know many students at USU that appear to have begun their studies for no other reason than it was what they were “supposed to do.” 

This idea that everyone needs to go to college has led to an absolute misallocation of resources. People who do not need to go to college are wasting time and money, others are pursuing unusable degrees, and the massive amount of graduates each year has rendered a standalone diploma near worthless without work experience. 

All of this, of course, is catalyzed by easily accessible student loans.

These loans prove problematic because, unlike a mortgage, the economic collateral value of the degree being pursued has massive variability — a finance major will likely be much more equipped to pay off his debt than an art history major.

It is possible that with time supply and demand will equilibrate to proper levels of allocation and the dynamics surrounding universities will change. This would of course, require that people start thinking differently about education, which flies in the face of many of our cultural norms. Nevertheless, even if society has issues with nonimmediate solutions, an individual can at a minimum, use this information to avoid common college pitfalls.

Do not let our society’s delusions and baseless cultural norms prevent you from extracting the most economic value out of your degree.

Kristian Fors is a student at Utah State University majoring in Economics and is an opinion columnist for the Utah Statesman. He enjoys studying psychology, traveling, and living life as intentionally as possible.

— krfors@gmail.com