Graham Leicester: Don't let degrees be a failure of creativity

The legacy of a 'sub-prime education system' must be addressed by politicians before it becomes a reality here in Scotland

I HAVE spent a good deal of time in the US in the past year, mostly working with the higher education system. It is not in good shape. I have seen early warning signs there of a future heading towards these shores - where students and their parents finally decide it is just not worth going to university any more. I call it "sub-prime higher education".

The analogy is with "sub-prime mortgages" - the bad debts that helped bring the global financial system to its knees.

My worry is that we are at the start of a similar cycle. The dynamics are at their starkest in the US. Tuition fees there vary from around $8,000 a year (5,000) for a public university up to $40,000 (25,000) for the elite colleges like Harvard and Stanford. Living costs are extra.

Over time the ratio between government and private funding has shifted - with students taking up more of the burden in fees. Average student debt on graduation is growing and now stands at more than $20,000 (12,500) for public universities and double that at private institutions.

None of this was a problem when loans were repaid. The US Census Bureau in 2002 published a report entitled The Big Payoff, noting that on average people could expect an additional $1million in lifetime earnings for a four-year Bachelor's degree over high school qualifications.

Now the promise is sounding hollow - 50 per cent of those entering higher education in the US drop out before getting a degree, or any sniff at the $1m jackpot. The need to combine study with paid work to keep on top of the bills is just too much.

Nor is the degree certificate itself living up to expectations. Graduate unemployment rates are at an all-time high. Many are having to trade down to find employment. Employers are becoming sceptical that some of the degrees on offer are not worth the paper they are written on. They are pressing the government to introduce stiffer measures of quality and common standards across institutions.

That only adds to the federal government's worries. With the banks no longer lending to students, it is the federal loans programme taking most of the risk on students' future earnings.The total sums are beginning to sound scary: $875billion in student loan debt at the turn of the year, greater than the outstanding debt on America's credit cards.

As one recent report put it: "lack of employment opportunities, inability to refinance and the lack of options to wipe out the debt in bankruptcy (federal loans cannot be written off) means that students are left with a crushing lifelong burden affecting their credit histories and long-term spending capabilities. This, if sustained, could have a significant depressive effect on the economy as a whole."

We must set this less-than-enticing prospect against the expectations of a generation growing up with open access to global knowledge and expecting to live their lives in the 21st century - on their own terms. These people are already accessing top-class course material on the internet, forming their own learning and support communities, finding cheap just-in-time learning on demand, forming their own social enterprises, seeking out mentors, learning by doing.

They will soon be voting with their feet and opting out of the higher education merry-go-round. And they will be encouraged by their hard-pressed and increasingly discerning parents. As one Berkeley professor told me last year: "I wish I had had the courage to tell my children not to go to college".

It seems to me that we are just at the start of this road in the UK. Exactly the same forces are at work. The promise of a graduate premium is still front and centre of higher education policy: more degrees means a more competitive nation and better earnings for the individuals concerned. Recent estimates suggest an additional 350,000 in lifetime earnings for medical students and an average of around 160,000 overall (only 35,000 for arts graduates).

Set against this, students graduating this summer are expected to have average debts of 21,000 - a figure set to rise substantially when tuition fees increase. Scotland remains an exception for the time being within the UK - but the trend is clear.

Just as in the US, the job market is brutal. Graduate unemployment levels rose to 20 per cent last year. Employers are starting to question the value of "Mickey Mouse degrees". And we all know dozens of graduates gaining experience as interns, serving in charity shops or working in bars, wondering where the big pay-off they were promised from higher education is coming from?

This is a sorry tale. Where the US has led, England is blindly following. What then will Scotland do?

The answer must be "something different".That means questioning the simplistic equations at the heart of policy that have led us to this place: more education means more money for the individual and higher GDP for the nation; the higher the level of degree the higher the payoff; education is (to quote Lord Browne's recent funding review) "a risk-free activity" with an "average return to graduates of around 400 per cent".

What if these truths are no longer self-evident? One response is to narrow the range of higher education to embrace only those institutions, and those subjects of study, for which these statements remain true.

Surely we can do better than that in Scotland - adapting our higher education system to fit the world, rather than vice versa.

We could start by acknowledging that diminishing returns are setting in on the quest for higher graduate numbers, and ask whether we really need to stick so rigidly to the anachronism of a four-year degree?

But those are mere details. More ambitiously, we could once again aspire to lead the world in the quest for learning.

Curriculum for Excellence has led the way. It promises to open up a much more permissive space in school age education to align with future needs rather than past glories. The mantra is becoming embedded: "educating people for jobs that don't yet exist, using technologies not yet invented, to solve problems we don't even know are problems yet".

What if the universities were encouraged to follow suit? Students who have come to associate higher education with debt at best and costly irrelevance at worst are already shaping a new wave of educational alternatives for themselves. But these too will only glisten with fool's gold if they rest on the assumptions of our discredited economists.

Anyone trusting that a degree certificate will net $1m in the next 40 years of a working life is likely to be sadly disappointed. But so too will those who expect a short, sharp modular course in online business planning to provide the wherewithal for a fulfilling life in a well-functioning society.

What none of these experiments can provide is the scale and the sheer intellectual weight of our best universities. There is a value in thoughtfulness and experience that can be missed in the quest for the new, new thing. A value too in the democratic intellect.

Is it too much to hope that our institutions of higher education can themselves grow an experimental leading edge, responding to the needs of a changing world and changing young people?

My work in the US suggests that some are absolutely up for the challenge - usually those with least to lose from the present distribution of academic power and resource. My hope is that in Scotland this can become not just the aspiration of a creative fringe but a national intention.While we may be able to "bail out" the banking system, the creative potential of our young people is not so easily rebooted - and we are going to need every ounce of it in the challenging decades ahead.

• Graham Leicester is director of International Futures Forum www.internationalfuturesforum.com