Last week there were two pieces of news relating to higher education. One was about the financial positions of institutions offering associate degrees. Another was about the upward social mobility of young people receiving post-secondary higher education. These two bits of news seemed to be unrelated, but it turns out they are linked together via the issue of the costs and benefits of higher education. The government's report on social mobility provides data and evidence on the problem.

The first piece of news relates to the finances of community colleges offering associate degrees. There has been an impression that offering associate degree programs is a highly profitable "business" and associate degree students are saddled with high tuition fees. Because of this belief, many critics suggest that colleges offering associate degrees should provide tuition remissions. The government's written reply to the Legislative Council suggests this common belief is not true. Among the nine self-financing community colleges, four of them recorded deficits in their operations. Of course, data covering one year cannot represent the whole picture of self-financing sub-degree operations. If we look at the figures for accumulated surpluses, some colleges are indeed making large surpluses. One institution has accumulated a surplus of nearly HK$1 billion. However, there are schools that have reported total losses of over HK$10 million.

These figures demonstrate there is no guarantee self-financed colleges offering associate degrees will make a profit. Those that have huge accumulated surpluses are all long-established institutions. Their surpluses are actually savings accumulated throughout many years of hard work. Moreover, these surpluses were not generated from self-financing associate degree programs alone but from the entire operation of the institutions. This is an important point, because a major criticism of associate degrees is their high tuition fees. High tuition fees are believed to make the colleges wealthy; however, the actual data suggest the opposite.

The second piece of news was about the effectiveness of higher education. The government published the report on a longitudinal study of the social upward mobility of young people. For those who graduated with a bachelor's degree, 10 years ago their annual starting salary averaged at HK$160,000. A decade later, their average annual income increased to HK$500,000, with a compound annual growth rate of 12 percent. In contrast, young graduates of associate degrees only received an average starting annual income of HK$70,000. Ten years later, their annual income increased to HK$300,000. In terms of the growth rate, their annual compound growth rate is 15 percent. Though the growth rate for the annual salaries of associate degree holders is higher, their low starting salaries makes it impossible for the average associate degree holders to catch up with bachelor's degree holders. These findings explain why associate degree holders always look for articulation opportunities (top-up degree programs). Only with better educational qualifications can young people achieve better upward mobility in the workplace.

When we combine these two items of news, we can observe an "inconvenient" truth: There is an obvious conflict between the high tuition fees for associate degrees and the usefulness of higher education. Self-financed colleges do not offer associate degrees for the sake of making money alone. These colleges operate with great difficulties. However, the high cost of higher education makes the tuition cost of an associate degree high. Young people have to pay high tuition fees and yet they cannot achieve the upward mobility they desire, so they understandably feel frustrated and unhappy.

From an educational perspective, associate degree programs can help improve the quality of Hong Kong's human resources, so the provision of associate degrees should be considered an investment in human resources. When the government cannot significantly increase the number of subsidized bachelor's degree places, it should consider the role and functions of associate degrees. Given that an associate degree is another avenue to provide further education to young people, the government should seriously consider ways to relieve the pressure of high tuition fees. When the data illustrate that upward mobility is lower for associate degree holders, relieving the burden of tuition fees can help these young people. The government should consider providing more subsidies, such as tuition waivers, more interest-free loans, more scholarships, or even vouchers. The lower burden will give the less-privileged associate degree students more opportunities and greater ability to move up the social ladder.

(HK Edition 05/26/2016 page12)