How useful is government spending on higher education?

One-hundred-and-seventeen million euros. That’s the amount of money Luxembourg’s taxpayers contribute to subsidise students who, under certain conditions, pursue a degree in higher education. This system of providing people with generous grants has been applied in the Grand Duchy for many years now, and is a consequence of a policy that began in France under president François Mitterand. The socialist president believed – accurately, I might add – that if you subsidise something, you tend to get more of it. More money for people pursuing a diploma will result in more people having them, and since those with degrees tend to command higher salaries, generate more in tax revenues and contribute more to the social system, the equation seemed beneficial for all parties involved. That, however, comes with a twist.

Each time something scarce is subsidised – something that has value notably because it is scarce – then you end up with more of it, while decreasing its inherent value. People with master’s degrees were rare 30 years ago, which explained the high value of those who turned out to receive one. Is that true today?

The prevalence of higher education has changed the mindset of employers: jobs for which, 30 years ago, you did not need a degree, you’re now required to have one, since the labour market is full of ‘qualified’ personnel. The quotation marks are not for theatrical purpose only – the question about whether people are actually more qualified now than they were before is a legitimate one.

All European countries, despite subsidising students to a degree never before seen in the history of this Continent, still find themselves with considerable job vacancies, in the fields of science, technology, engineering and mathematics, for example.

On the flipside, we have myriad students in political science, liberal arts and international relations, which are undoubtedly interesting degrees to pursue but don’t necessarily end up with employers flocking to the university campus to hire the students.

The most striking unintended consequence of all this is that it has increased the burden on low-income households. Those struggling to pursue a degree are now, given the transformation of educational requirements, obliged to go to university instead of opting for internships or apprenticeships that would have fit their personality and skills much more.

The assumption that “everyone needs a degree” has become something very Luxembourgish. Those who do not hold a university degree, yet are active in public life, are asked how they managed, as if they needed a certification from a higher authority to testify to their skills. There’s certainly good reasons to believe that a person building an aircraft, treating a hospital patient or defending someone in court needs to have adequate degrees to learn the necessary skills, but that’s not what we get. What we get is a lot of people who settle for public service or for fields that leave the education sector as their only option. It’s “he who can, does – he who cannot, teaches” all over again.

The right to higher education

This system has also become a problem for the universities themselves. How often do we see the images of lecture halls being filled to their last seat and staircase, and colleges introducing high admission requirements to reduce the pool of possible attendees. In the name of equality, countries are also attempting to lower the standards of universities to have more people with bachelor’s and master’s degrees. Tuition-free or quasi-tuition-free higher education has reduced the quality of the universities considerably because it isn’t a privilege to attend and pass them but a presumed right.

Luxembourg has learned this the hard way, with recent numbers showing the University of Luxembourg ranking an embarrassing 200th place in the World University Rankings. Compare this with the UK, where tuition fees remain high, yet the country has maintained a largely performing system of prestigious universities.

Now the question is, of course, whether it is a person’s right to go to university, and whether the government’s ambition shouldn’t, indeed, be to give everyone that equal opportunity. That presumes that, if the government didn’t fund higher education, none of those with very little means could attend university, and it also presumes that only people with a university degree would be better off.

Both of those claims are questionable. Many privately funded scholarships already exist, and many prestigious universities pride themselves in allowing for talented students to attend their schools tuition-free. Attending a university should be merit-based, not existence-based, and the absence of government involvement would affirm this principle.


This article was first published by the Luxembourg Times.

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About Bill Wirtz

My name is Bill, I'm from Luxembourg and I write about the virtues of a free society. I favour individual and economic freedom and I believe in the capabilities people can develop when they have to take their own responsibilities.

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