With the cost of education on the rise, there is added pressure for a ‘return on investment.’Getty Images/iStockphoto
As university students and their parents prepare for the return to class, furnishing residence rooms and apartments, buying supplies and writing tuition cheques, there may be a nagging question in the back of their minds: Is this experience worth the cost?
The value of a university education has been debated for decades, but with expenses on the rise, the pressure for a "return on investment" has never been higher.
Tuition has jumped in recent years. According to Statistics Canada, average undergraduate tuition fees rose by 3.2 per cent last year and 3.3 per cent the year before, outpacing cost-of-living increases. The average undergraduate tuition fee paid last year was $6,191, although the figure is higher in some provinces, and certain undergraduate programs – such as dentistry and pharmacy – can cost many times the average.
Add residence and meal costs to that, plus books, transportation and other expenses, and attending university becomes a huge upfront investment. While the personal growth from a higher education provides vast intangible gains, many people want to measure the costs against the financial benefits it will provide over a lifetime.
"As the cost of education rises and as the markets become more competitive, universities should rightly be challenged to demonstrate that what they are providing does have that tangible benefit after graduation," said Tony Eder, executive director of academic resource planning at the University of Victoria.
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For many years, UVic and other British Columbia universities and colleges have surveyed students after they graduate, compiling data on their skills, jobs and income levels. That information is public, released as the Baccalaureate Graduates Survey.
UVic has also participated in a much broader study that is generating a more detailed picture of the earnings of graduates. It is one of 14 colleges and universities in four provinces that provided student records that were linked with tax data, revealing income patterns between 2005 and 2013 for graduates earning bachelor's degrees and college diplomas.
The work, led by the University of Ottawa's education-policy research initiative, generated some surprising results, which were spelled out in a report released this summer.
Yes, engineering, business and computer science graduates had higher incomes than people graduating from other faculties, but humanities and social science grads also did well.
That's counter to what U of O professor Ross Finnie, the report's lead author, calls the "barista myth," the widespread and entrenched idea that certain university degrees will lead only to low-paying jobs such as serving customers in coffee shops.
Except for fine-arts graduates – who have the hardest time finding well-paying jobs – earnings of social-science and humanities graduates are well above the "barista" level, even in the first year after they graduate, the study shows. Social-science grads who finished university in 2005 started with earnings of $36,300, but that rose to $62,000 after eight years. Humanities grads went from $32,800 to $57,000.
Humanities and social-science graduates have problem-solving skills, are good communicators and can be very innovative and adaptable, Prof. Finnie said. Many employers recognize that and are hiring them.
Still, engineers were out in front, earning an average of $56,400 their first year after graduation, and $99,600 eight years later.
While studying engineering, business or computer science does often lead to a solid career with high pay, "not everyone wants to be an engineer, and not everyone can be an engineer," Prof. Finnie said. "To say, 'Well, if you can't be an engineer or scientist or computer technician, you might as well pack up and go home,' is not doing young people a service when they are making one of the most critical decisions in their lives."
Adding more universities and colleges to the study would give it a broader reach, Prof. Finnie said. And there is a need for further work to examine what specific skills are valuable in labour markets, to determine the financial value of participating in a co-operative program while in university, and to look at the links between students' personal backgrounds or high-school marks and their eventual employment.
While there is now more interest in evaluating the financial value of an undergraduate degree, the practice has been common for years in the world of graduate business degrees. Forbes magazine, for example, has ranked U.S. MBA programs on their return on investment since 1999. Last year, Stanford's graduate school of business came out on top with graduates earning back their tuition investment and making an average gain of $89,100 (U.S.), five years after graduating.
At the undergraduate level, the pressure on universities to come up with data on job and earnings prospects became particularly pronounced after the onset of the recession in 2008, said Paul Davidson, president of Universities Canada, the umbrella organization that represents Canada's university administrations. Before that, a degree's "value proposition was unquestioned and unchallenged," he said.
While it is very helpful to have the "granular and comprehensive" data from studies like Prof. Finnie's, they underline what has always been true, Mr. Davidson said: "The overwhelming story is that Canadian university graduates do well, economically and socially. [A degree] is still the surest path to prosperity."
But it is crucial to recognize that attending university, and being exposed to all the experiences there, also creates "transformed individuals," he said. By the time a student is presented with a degree at convocation, "maybe they did a co-operative internship, maybe they've studied abroad, maybe they have fallen in love, maybe they have formed the lasting friendships that form the social cohesion to life."
Indeed, while it is important to understand the potential economic value of a university program, that should not be the sole reason for choosing a particular subject to study, said David Barnard, president of the University of Manitoba.
He noted that entering a specific field of study based solely on its potential job prospects can backfire. For example, some people who jumped programs specifically geared to the oil sector are now finding that jobs are hard to get in that field. And many people avoided information technology after the IT stock bubble burst in 2000, he said, not realizing that the sector would roar back with great job prospects a few years later.
The best bet for incoming students is to find a subject that they find exciting, Mr. Barnard said. While "of course it makes sense to pay attention to the economic realities of life, whatever choice you make is going to shape what you are able to do for the rest of your life, and it should be something that you are passionate about."
Even making really good money, if it involves doing something you hate, can be a recipe for unhappiness, he added.