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Education is Much More Expensive Than We Are Prepared to Admit

by Mark Ellse
20 September 2023 9:00 AM

No-one denies the problems surrounding higher education in the U.K. Rachel Johnson and Toby Young discuss some of these in a recent episode of Spectator TV. Problems are as apparent to students as they are to those of us who observe from a distance. Many students feel that universities are shortchanging them with low teacher contact time in some subjects. They see ‘rip-off’ courses with many of the contact hours being virtual, a never-ending student debt to repay and often come in time to realise the irrelevance of their higher education, having chosen subjects before they know what they want to do with their lives.

Grave though this is from the students’ perspective, there is another aspect of higher education that one never hears spoken – the cost of diverting and frittering away the productive working time of the young, an invisible drain on our society far larger than the apparent costs of higher education.

On the face of it, the costs of higher education seem modest. In round figures, the 2022-23 budget for tertiary education from central Government was £5 billion. On top of that, students paid fees of £9,000 each, a further £20 billion. Two thirds of the students were in accommodation away from homes which, at around £5,000 per student, adds another cost of £7 billion to the bill, making a total of £32 billion. This is comparable with the cost of pre- and primary education and much less than the £54 billion of secondary education. What’s more, most of this expenditure comes from the willing future pockets of the students who happily agree to pay 9% of their future income in excess of the repayment threshold. (I admit some irony here.)

But what this doesn’t take into account is the opportunity cost of years spent at university.

The opportunity cost of any activity is the loss incurred as a result of choosing that activity instead of doing some alternative. Students are becoming increasingly aware of the opportunity costs to them of higher education. With fees and accommodation, they know that, fees and accommodation together, a three-year course will run up a loan of £50,000. On top of that, they look at their contemporaries who choose to work instead of studying for a degree. While they are at uni for three years, their working friends earn around £20,000 a year, a total of £60,000. So the total cost to a student of a degree is the £50,000 of education costs plus the £60,000 of lost income. A degree, therefore, costs well over £100,000 – more than twice the cost of what ends up on their student loan. 

In the same way that students are subject to opportunity costs as a result of higher education, society as a whole is also subject to opportunity costs. Let’s see how they arise.

The Gross Domestic Product (GDP) of a country is the total value of all the goods and services produced within a country. For the U.K. in 2022 it was £2,230 billion. 

Who produces all this value? Why the workers in the country of course – about 30 million people working in 2022. With simple division we see that the GDP per working person is £74,000. That means that, on average, every working person in 2022 generated goods and value worth £74,000.

Again in 2022, the average wage was about £24,000. I find it helps to think of these two figures, average wage and average value of goods and services produced, in terms of running something like a bus company or a house building company.

In this analogy, the average bus driver paid £24,000 is expected to earn about £74,000 in ticket sales on his bus. In the same way an average bricklayer, paid £24,000, is expected to build walls worth £74,000. The difference between the wage and the value of services or goods produced goes principally to two things: the cost of the things needed to do the job (premises, buses, bricks etc.) and taxation to pay for things like education, health, defence etc.

What happens if, instead of plying the worthwhile trades of bus driving or bricklaying, these two individuals choose to go to university for three years? The answer is simple. The economy contracts by, on average, £74,000 per student, while they sit in a lecture theatre, watch a lecture online or lie in bed. Instead of producing £74,000 worth of goods and services, they do nothing productive. The opportunity cost to society for every student is £74,000. Sure, education is a good thing. We get greater productivity later. But do we? And how much?

The increase in the proportion of the population going into higher education from 5% in 1960 to 37.5% in 2022 corresponds to an extra 1.8 million students in higher education in 2022. What is the total opportunity cost of all these students going to university? Or, let me put it in another way: how much better off would our economy be if all of those students were working instead of studying? The answer is simple: 1.8 million students multiplied by £74,000 per student – a total of £133 billion per year. 

The total cost of higher education per year is the sum of the actual costs of £32 billion plus the opportunity costs of £133 billion. That is a total of £165 billion, nearly enough to cover the whole cost of the NHS, or 25% more than the current budget deficit.

In 1972 the school leaving age was raised to 16. In 2013, the Gove-Cameron partnership raised to 18 the age for leaving education. Now we understand the opportunity costs of chaining our young people to education, we can see how frighteningly expensive are the real costs of imposing extra education on large segments of the population. 

Each year cohort – 16-year-olds, 17-year-olds etc. – comprises about a million young people. Raising the educational leaving age for half a cohort takes half a million out of the workforce – an opportunity cost of nearly £40 billion.

Imagine if the focus of education were to shift just a little to reduce the numbers under its sway by a million. What benefits would we see?

We’d see an increase of GDP of over 3% caused by a million more people working. The need for immigration would reduce by the same number. Since we would not be taking in a million from overseas, it would reduce housing demand by 250,000. And, if half a million of those moved into work were students currently studying away from home, that would free up 125,000 houses. This provides a total improvement in the housing shortage of 375,000 houses. This is worth comparing with 192,000 houses that were actually built in 2022.

Nellie Foster started school at the age of five. In 1939, at the age of 14, she left her secondary modern school and started working in a cake shop, developing a skill in tying brown paper packages that always amazed. A few years later she recognised her interest in teaching and, after being a childminder, moved to a nursery, which enabled her to take her NNEB (National Nursery Examination Board) diploma. At that time the NNEB was a qualification obtained part-time, alongside working. 

In September 1949, at the age of 24, Nellie Foster completed a one-year “course of training for the teaching profession… with special reference to the requirements of children aged five to nine years”. And from then on she was a qualified teacher. I worked with many such emergency-trained teachers at the start of my teaching career. Despite their education having lasted a mere 10 years, compared with the 20 years for most teachers nowadays, they were indistinguishable in their knowledge and teaching ability, if very much less woke.

Without knocking our current education system, it is worth thinking about the fearful costs involved and gently pointing to the potential benefits that would result if we could achieve similar standards in just a little less teaching time.

Tags: EconomyEducationStudentsUniversity

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24 Comments
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stewart
stewart
2 years ago

I find the analogy of Hitler invading Czechoslovakia and then Poland is used not just with the Ukraine but with many othe geopolitical situations primarily to warn of the perils of appeasement and advocate for military action.

It’s a hard argument to counter because it implies that the aggressor has the intention of going further. And that is materially impossible to disprove. You can’t ever prove to anyone that you’re not going to do something.

The fact that Russia has nukes isn’t a good counter. If anything it reinforces the argument that they intend to advance with impunity.

The argument that the west is economically much bigger doesnt help either. More reason to slap them back.

The Hitler analogy is the warmonger’s trump card.

19
-13
Rob Westbury
Rob Westbury
2 years ago

[…] conditional on each side’s willingness to negotiate.

There is nothing that the Ukrainians should negotiate.

Their territory has been invaded. Their citizens are being raped, maimed and killed. Ukrainians are being bombed out of their villages, towns and cities. Their natural resources are being destroyed. Russia encouraged and armed separatists in the east of the country, just as they did in Transnistria and as they did in South Ossetia.

As a matter of principle why should they negotiate anything that cedes to Russia even a single square inch of Ukrainian sovereign territory? There should be no reward for Russia’s actions and Putin’s now admitted imperialist ambitions.

15
-78
stewart
stewart
2 years ago
Reply to  Rob Westbury

The reason to negotiate would be to spare the population from being crushed by a war of attrition they can never win.

Sometimes there are no good choices, just crappy ones from which one can try to choose the least crappy.

32
-2
PhantomOfLiberty
PhantomOfLiberty
2 years ago

Truss had a surreal idea of the role of Foreign Secretary seeking only to polarise matters even more and encouraging young people to out and fight. It ain’t what you do.

38
-3
BurlingtonBertie
BurlingtonBertie
2 years ago
Reply to  PhantomOfLiberty

Despite all of the rhetoric of doing everything about the British mercenaries sentenced to death, no diplomatic contact has been made by the FO….
Despicable after urging British mercenaries to fight.

22
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Lockdown Sceptic
Lockdown Sceptic
2 years ago

no.

19
0
crisisgarden
crisisgarden
2 years ago

While I agree with the thrust of this article, it does seem like pandering to gibberish. The most glaring fact for me is that we are clearly not talking about an expansionist power. There is no evidence whatsoever that Russia intends to seize new territory. You could at a stretch call Crimea a kind of land grab (which is patently absurd) and at an even greater stretch you could argue that by recognising the breakaway regions in Eastern Ukraine, the Russians have expanded their sphere of influence. That’s it. Putin’s been in power for 20 years and we see no evidence, either in words or actions that under his leadership, there is any intention to expand. And why would they? They already have the largest and arguably most resource rich country on earth. What exactly would be the benefit to Russia of risking annihilation in order to, I don’t know, seize a stretch of the Baltic coast?! Give me a break. I don’t think we should lower ourselves to the level of these daft ideas in the media and commentariat.

67
-6
RW
RW
2 years ago
Reply to  crisisgarden

What exactly would be the benefit to Russia of risking annihilation in order to, I don’t know, seize a stretch of the Baltic coast?!

Just the most obvious ones: Ice-free harbour in the Baltic sea beyond Köngsberg, elimination of NATO miltiary presence close to the Russian capital, re-attach the Kaliningrad military base to the motherland. Putin is also on record for stating that he considers the Baltic statelets Russian territory Peter the Great rightfully reconquered from Sweden.

8
-23
Hugh
Hugh
2 years ago
Reply to  RW

Koenigsberg. What happened to their German speakers again?

3
-1
RW
RW
2 years ago
Reply to  Hugh

With generous American (and British, but mostly American) help, the Red Army essentially depopulated the complete area. What used to be the breadbasket of the Reich is now mostly wilderness (population density is less than half of that of Poland and Poland is already huge and mostly empty) and there’s a large, Russian military base.

Russian culture and civilization at it’s usual finest.

1
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BurlingtonBertie
BurlingtonBertie
2 years ago
Reply to  crisisgarden

The Crimean population voted to become Russian it wasn’t annexed. The vote in favour was well over 90%
Same as the Donbass regions voted to be independent areas within Ukraine & have been under attack from Ukrainian forces ever since.
Russia went in after the number of artillery strikes had increased over the previous week to prevent loss of life. Article 51 was invoked at the UN. Their intervention is akin to a NATO Blue beret mission to save life.
The bigger the weaponry given to the Ukrainians, the further back their troops must be pushed to prevent them from shelling & killing the citizens of the Donbass.

42
-5
crisisgarden
crisisgarden
2 years ago
Reply to  BurlingtonBertie

Yep, I’m with you (I was being deliberately measured!) and was from the start of the whole crisis in 2014; except we’re not allowed to talk about that, we’ve all got to pretend that history started in February 2022, when Putin woke up one morning and decided to single-handedly restore the USSR.

34
-3
RW
RW
2 years ago
Reply to  BurlingtonBertie

As I’ve written a couple of times in the past already: Putin as Russian leader acting in what he believes to be the best interest of his country regardless of what the Atlantic Charter cooked up by Churchill and Roosevelt happens to say about wars would deserve some respect. But not Putin the whiney inventor of seriously thin pretexts for his actions. This deserves nothing but contempt.

4
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ebygum
ebygum
2 years ago
Reply to  crisisgarden

…yes, when we talk about expansion, it’s always good to remember that Russia has between 12-36 military bases outside of Russia… China has about 8.
The Uk itself has around 145, while the USA has around 750 in 70+ foreign countries/territories.

In March of this year Biden was at a meeting of the Business Round Table when he said…”There’s going to be a New World Order out there, and we’ve got to lead it.”
Not much equivocation there….

5
0
RW
RW
2 years ago

This constant discussion of the second world war under the guise of any supposed topic starts to get pretty tiresome, especially when not even the most basic facts are right.

Poland was an state which had been artifically recreated by the Entente powers from German and Russian territory based on the usual motto of self-determination of the peoples unless they’re German and don’t count as people. As this was bound to cause trouble later on, both Britain and France had made so-called guarantees for the existence of the Polish state in its then-current form, ie, there were formal treaties stating that invasion of Poland would be a casus belli for both.

By that time, Germany and Russia were allies and they conducted joint invasion of Poland the outcome of which was a fourth Polish partition, ie, the territory of the former Polish state went to Germany and Russia. Despite this, neither Britain nor France did anything to help the Poles save declaring war on Germany. Neither of both powers considered declaring war on Russia (as far as I know).

How any of this could apply to the situation in Ukraine is anybody’s guess. As someone already pointed out, the negotiated solution is red herring. The correct term for what that’s supposed to mean would be Ukrainian surrender. That’s what Fearmongeringheimer and his associates want. And chances are that they just want this because it amount to sort-of a defeat for the current US government.

Last edited 2 years ago by RW
14
-6
ebygum
ebygum
2 years ago

I don’t think so…after all Poland wasn’t being used by the USA as a proxy at that time to try to reduce the power of the Germans …as Ukraine is now being used to try to, in the words of LLoyd Austin the US Defence Secretary..”…to see Russia weakened to the degree that it can’t do the kind of things it has done in Ukraine.” Which really means..we can’t let Russia..and our main problem China, ally with each other.

The US Government’s Commission on Security and Cooperation in Europe (CSCE) holds a briefing today on the “moral and strategic” necessity of partitioning Russia.In other words they are having a discussion on the “need” to partition Russia (into little pieces) for “moral and strategic” reasons.

So Russia knows exactly where it stands, China knows they are next..
we are being taken into a war that the vast majority of people don’t want to maintain USA hegemony, and we don’t get a choice, (and Ukraine won’t survive either…)

56
-1
Judy Watson
Judy Watson
2 years ago
Reply to  ebygum

That scenario is boody scary, sorry but I hope you are wrong but I fear you may be right.

Depressing times.

4
0
ebygum
ebygum
2 years ago
Reply to  Judy Watson

…we are lead by idiots unfortunately Judy…Liz (the village idiot) Truss keeps taking us one step closer to annihilation with tweets like this….

“The UK fully supports Lithuania stopping sanctioned goods from Russia travelling through their country. We must stay strong in the face of Russian aggression and challenge these unjustified threats”

(A blockade is an act of war that is regulated by international law—namely, by the 1856 Paris Declaration Respecting Maritime Law and by Articles 1–22 of the 1909 London Declaration Concerning the Laws of Naval War. It is important to distinguish between the terms blockade and embargo . An embargo is a type of economic sanction that may be adopted under the aegis of the UN or another international organization, to try to force a State to comply with a decision.

Regardless of whether the situation is a blockade or an embargo, humanitarian law clearly posits that States are under the obligation to allow the free passage of relief that is of an exclusively humanitarian and impartial nature and is indispensable to the survival of the civilian population (GCIV Art. 23, API Art. 70, and APII Art. 18.2).

Importantly….Whether or not a blockade was seen as lawful depended on the laws of the nations whose trade was influenced by the blockade.

2
0
PhantomOfLiberty
PhantomOfLiberty
2 years ago

For any reasonable assessment the West has undoubtedly been baiting Putin through Ukraine and particularly since 2014 – and questions have to be asked of the West’s larger design. Biden has talked of destroying Putin, others of weakening him. Ukraine is not a democracy and it has been persecuting ethnic Russians. None of this is seriously disputable. The war undoubtedly damaging Western security and its economy. It is actually daft.

52
-2
Monro
Monro
2 years ago
Reply to  PhantomOfLiberty

It is all very ‘disputable’, particularly since you offer no references, evidence, in support of your assertions.

Nevertheless you are, in my view, correct to say that the war is damaging Western security.

That is why Sweden and Finland have now applied to join NATO and NATO members are radically increasing their defence budgets

And you are also correct in describing the invasion of Ukraine as daft.

Last edited 2 years ago by Monro
1
-6
ebygum
ebygum
2 years ago
Reply to  PhantomOfLiberty

On Monday (Z)elenskyy addressed the African Union in a virtual discussion…
only four Heads Of State attended..out of the 55 that could have….

The nonsensical, childish propaganda that passes for news in the UK has given people a ridiculous and uniformed idea of what is actually happening.

13
0
Monro
Monro
2 years ago
Reply to  ebygum

Follow the money:

‘Between 2001 and 2018, China loaned approximately $126 billion to African countries. Between 2001 and 2018, China invested $41 billion in FDI.’

‘China’s investment in Africa ensures that its investment results in greater global consensus around Chinese interests.’

Chinese Economic Engagement in Africa 24 Jan 22

Last edited 2 years ago by Monro
0
0
Nearhorburian
Nearhorburian
2 years ago

Declaring war on Germany in 1939 turned out to be a disastrous mistake, so we should learn from that and take no further steps to extend or expand the war in Ukraine.

19
-4
Monro
Monro
2 years ago
Reply to  Nearhorburian

How do you work that out?

4
-4
marebobowl
marebobowl
2 years ago

How can anyone comment on this circus? It is a 🤡🌍

3
0
Monro
Monro
2 years ago

An analogy has a number of different meanings but one of them is:

‘a comparison between one thing and another, typically for the purpose of explanation or clarification’

And the appeasement of Germany over Czechoslovakia in 1938 then standing firm in 1939 after the invasion of Poland does explain our actions regarding Ukraine.

Negotiation/diplomacy failed after 2014 when we ignored our 1994 guarantee of Ukrainian territorial integrity.

Putin has several times made clear that he has further expansion in mind.

‘“Apparently, it also fell to us to return (what is Russia’s) and strengthen (the country).
“And if we proceed from the fact that these basic values form the basis of our existence, we will certainly succeed in solving the tasks that we face.”
“It’s impossible — Do you understand? — impossible to build a fence around a country like Russia.’

General Rustam Minnekayev, acting commander of Russia’s central military district, also told members of a defence industry forum that control over southern Ukraine would give Russia access to Transnistria in April 2022.

So the choice for this country and its allies is clear, but closer in analogy to our predicament over Czechoslovakia in 1938 than Poland n 1939.

We’ve been here before. We know what to do.

1
-5
RW
RW
2 years ago
Reply to  Monro

And the appeasement of Germany over Czechoslovakia in 1938 then standing firm in 1939 after the invasion of Poland does explain our actions regarding Ukraine.

ROTFLMAO. Great Britain stood firmly on the other side of the channel and let the Germans and Russians do whatever they wanted to do. They could easily have landed troops to support them instead as the German navy was absolutely no match for the Home Fleet and the straits were still under Danish control. For some reason someone will certainly know, they also never (as far as I know) objected to the Russian invasion of Poland. Coming to think of it, Not-so-Great Britain actually never objected to Russian communists invading anything or subjugating anyone. After all, those strange people in distant, east European countries one knows little of are not so important.

NB: There’s absolutely nothing wrong with that except that this blatant case of disingenious Realpolitik isn’t suitable for taking a moral high ground.

0
0
Monro
Monro
2 years ago
Reply to  RW

The idea that Britain could have intervened in Poland in 1939 is just plain silly.

To see some of the likely consequences, squared, why not study Britain’s intervention in Norway 1940?

0
0
Kornea112
Kornea112
2 years ago

All out war is a hugely destructive process and is an option of absolute last resort. The US would never have entered WW2 except for the attack on Pearl Harbour. How were Britain’s convinced they needed to go to war when Hitler was going after Russian Communists? The analogy is nothing at all similar. As long as small wars are happening in remote far away places people don’t really feel threatened and virtue signal all day long. Covid has shown how easy it is to control public opinion.

6
0
Monro
Monro
2 years ago
Reply to  Kornea112

Or not really.

Germany and Russia signed a non aggression pact in 1939 which allowed both of those countries to invade and partition Poland.

The pact lasted until Germany invaded Russia in 1941, two years after Britain had declared war on Germany.

Chamberlain had told Parliament, representing the British people, on 31 March 1939, that Britain would support Poland in resisting any aggression against that country.

We said the same thing to Ukraine in 1994.

0
0

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