Is the UK Committing Suicide By Hiking College Fees?

By Shlomo Maital

   Together with my colleague Amnon Frenkel, I recently wrote a report on the rate of return to investment in educating a Technion science and engineering graduate.  The report was based on a Web survey of some 4,450 Technion graduates. The results were striking.  The return (risk free) is on the order of 76 per cent to 192 per cent.   Despite this, during the 2001-2009 decade, university budgets in Israel, including Technion, were mercilessly slashed by governments who believed fiscal austerity was more important than investing in the nation’s future.  All of Europe is now afflicted by this wrongheaded misguided fumble. 

   Now comes a British study, reported by the BBC, which states:

UK graduates contribute to the economy almost 10 times what it costs the state to educate them to degree level, research suggests.   An IPPR think tank and UCU academics union report suggests graduates bring in £180,000 more than those with A-levels over their working life.  An average degree costs the state just under £18,800 per student.

Do the math.  This is a 1,000 % rate of return.  And the British government is scrapping it. 

  The consequence? 

….. in 2000 the UK had the third highest number of graduates among advanced industrialised nations.By 2008 it had fallen to fifteenth because competitor nations had been investing at a faster rate, the report says.   China quadrupled its number of graduates between 1999 and 2005 and is expected to become the world’s largest producer of PhD scientists and engineers.  Recent research has suggested that the number of students graduating in the UK is likely to fall further following tighter restrictions on student numbers, with 15,000 fewer higher education places in September 2012 compared with the previous year and around 25,000 fewer places in English universities.   Recent UK reforms to the higher education system have led to reductions in courses available in key areas such as science, technology, engineering and mathematics (STEM) skills.

      What possible future can Britain have, other than that created by its scientists and engineers?   And what utter folly can lead a government to destroy that future, while competitors in Asia singlemindedly build and enhance theirs?  And why are governments all through Europe committing the same madness?  And since when does scrapping a 1,000% return on investment make sound economic sense?  And why are there economists, some with Ph.D.’s, who approve of this folly and support it?