Tuesday, December 6, 2011

China's “Ministry of Education to Phase Out Majors Producing 'Unemployable Graduates'" (should schools co-sign student loans?)

Jim Chanos recently expressed a related idea on Bloomberg Television re: for-profit schools:

..."I think the business model is flawed because it all depends on the taxpayer," Chanos told Bloomberg's Betty Liu.  "None of the companies can exist without federal loan guarantees."

"If this is such a great business, then why don't you lend money yourselves than depend on a federal handout," he added....
From Wm. Briggs, Statistician to the Stars:
As often has been said, if everybody is a genius, then nobody is. The wisdom in this apothegm is little changed by the modification: if everybody has a certification of genius, then nobody has. Especially so if the certification is a bachelor’s “degree.”

The goal of ensuring every citizen is possessed of a bachelor’s “degree” is thus silly. If everybody has a “degree” then there is no use asking to examine the “degree” of any person. 

There would still be an advantage in asking in what subject is a person’s “degree.” But this question is only a proxy to asking what a person knows and what he can do. To the extent a “degree” signals this information, it is useful. But when knowing a “degree” only makes it slightly more probable than not that a person has a set of desirable skills, then again, having the “degree” is of little value.

Which is why it makes sense, if you view college as extended-beyond-high-school jobs training, to do what China is doing. Their “Ministry of Education announced this week plans to phase out majors producing unemployable graduates…The government will soon start evaluating college majors by their employment rates, downsizing or cutting those studies in which the employment rate for graduates falls below 60% for two consecutive years.”

They are doing this because of the tremendous increases in its citizens attending college, and because they recognize that all “degrees” are not equal. “In 2010, 72% of recent graduates found work, up from 68% in 2009, according to the Ministry of Education.” So it can work—although how much of this increase in jobs placement comes from toning down college programs is unclear....MORE