Why Undergraduate Degrees are More Like Buying a Car than a House

There is a clear pattern of thinking about the value of higher education in purely economic terms. Questions about how much graduates earn dominate mass media discussion of the industry (1, 2, 3) while university marketers talk almost endlessly about employability (4, 5, 6). Meanwhile, academics themselves squabble about higher purposes.

The mismatch in this issue comes down to how we position the aims of higher education. Below I explore a metaphor for higher education that places it in the economic terms that policy makers, administrators, and employers might understand. These terms rely upon the purchase and possession of goods. I argue that completing a bachelor’s degree is less like buying a house and more like buying a car.

What is a house worth? Picture from Flickr/alancleaver

In general terms, the purchase of a house gives the owner a sense of security and a foothold in the market, with an asset that appreciates in value over time. On the other hand, the purchase of a car — new or used — is more instrumental. It opens up access, but depreciates in value and tends to have repeated significant costs of upkeep and the need to upgrade at some point in the future.

Like a car buyer, the buyer of an undergraduate degree (ie, the student) gets access to a job market from which they were previously excluded. However, they do not get automatic entry as there might be other conditions (tolls). These might include the need to have relevant work experience in addition to the qualification. Or they might be the requirement to ‘know somebody.’ In this regard, having a newer car (more recent graduates or those from a particular university) might help in getting access.

Over time, the value of a degree decreases and employees might need to keep up with their industry through new training. Just as cars require regular servicing to stay on the road, workers must keep their skills up to date — whether through formal study or other means.

Unlike car buyers, home buyers (in this metaphor, it might be those born into mining families, for example) are in a relatively stable position. They don’t have to do much beyond basic maintenance to keep their starting position, and their assets appreciate in value.

The deregulation of universities in Australia seeks to increase the upfront costs for car buyers, in a market where the on-sale value is increasingly questionable. Meanwhile, other policies of government are giving home owners (both literally, and the miners) a break, apparently due to the uncertain situation in which they find themselves and their assets.

Those that rely on the value of their cars to carry them through life may be hoping for improved conditions in retirement, but there’s bad news on that front too.

In this situation, there appear to be two options. Either the non-economic value of higher education is accepted by both employers and students as having at least as much importance as the monetary output or the monetary value of degrees is increased. One way to do that might simply be to reduce their cost.