Why does a senior college business student sign a $60,000 loan for one year’s tuition, then the very next year sign a contract of employment for a $60,000 annual salary?
I’m a business student at a business school, but I might as well be an employee at a corporation. Our business school is a trade school. We’re not here for a liberal arts education; in fact, we’re not here for an education at all.
We’re here to acquire the skills that make us marketable to top firms; really, we don’t even care about the skills, we just need the piece of paper that says we have them and the number that says we’re good at them.
The piece of paper, the degree, the diploma: the only reason a college student experiences a $120,000 swing in value from the time he steps onto the stage at graduation and accepts his diploma to the time he steps down as a college graduate.
In economics, there’s this thing called signaling, which basically means that one party tells something about itself to another party; in the case of a college graduate seeking employment, the degree signals to an employer that the student acquired a certain amount of knowledge while studying at university.
The employer receives the signal of a bachelor’s degree, for example, and assumes it is positively correlated with having greater ability after four years of higher education.
But why is this magical threshold of value placed precisely after four years? When exactly does a student surpass the threshold of skills that make him or her valuable, and therefore hirable, by a top firm?
What happens at graduation where all of a sudden a college student no longer pays to learn, but gets paid to work? Do we not learn a great deal as we work? Then why can we not also work a great deal while we learn?
Why are we not able to start producing value for the firms and economy until after precisely four years? Maybe not as freshman, but as sophomores, surely we are able to do at least menial projects and calculations that would save companies time and money.
I remember taking a finance exam during my sophomore year, working on a particular annuity calculation — several cash flows with different equal and regular payments discounted backwards in time with different interest rates and compounding dates.
I looked up. I was in the middle of a sea of students. If I recall that testing center had 500 seats. And all my classmates were working so hard, thinking and writing fast and accurately, nonstop for two hours.
Then I looked back down at the annuity problem — something about a company with a made-up name and made-up financial data, a company that didn’t exist. The problem wasn’t real.
But what if the problems were real?
What if, instead of playing make-believe, we started working like the employees we’re acting as anyways?
What if our exam solutions could solve a real company’s real problem with real numbers to make a real positive impact on the real world?
What if, instead of throwing away exam booklets and trashing computer homework files, we transferred the value of human capital expended in the classroom straight to the economy?
Five hundred students worked on that finance exam nonstop for two hours. The value of 1,000 high-skill man hours transposed onto the stapled pages of our exam booklets.
How many exams were proctored to finance students at our university that year? How many to accounting, management and marketing students? How many to nonbusiness students? Engineering, math, science, English. How many to students at other universities that year? And all the years before? For as long as higher education has existed. And not only exams but papers, projects and presentations too.
How much human capital have we wasted at university?
This is not to tear down our old institutions, but to build up our young individuals. College students are powerful beyond their own imaginations, and even more so when working together. Like minnows attacking a whale, or coders solving an open source problem.
We may just be little undergrads, but together, we can make a big impact. With such great intellectual power, why must we spend so long in our college bubbles without doing any good for the outside world?
I love college just as much as the next kid. I love that we have four years to just hang out and drink and muse and figure out our lives.
College is an important social institution, an important place for us to find ourselves before we enter the real world and start making big decisions. But there’s no reason for us to be a drain on the economy.
We can stay in our bubbles and find ourselves, while producing unprecedented value for the economy. And it would make no difference to our college experience, except for decreasing our student debt, and tailoring our learning to the career we intend to enter.
So, I am challenging colleges to restructure classes, exams and homework assignments to be capable of deriving value from the human capital poured out by its students, firms to become capable of receiving this value in a manner that would justify wages being paid to students, and the entrepreneurial community to help both parties along, as bureaucratic giants tend to drag their feet.
