There is a story we have been told for decades. It goes like this: education is the key to opportunity. If you want a good job and a middle-class life, you need a degree. And if society wants to reduce inequality, it should send more people to university.
This story is not entirely wrong. Education likely will improve outcomes for individuals. But when a government decides that more people should go to university and starts subsidizing it, something strange happens. The value of the degree starts to fall. Not because the education gets worse - but because the supply of graduates increases independent of the demand for them.
This is the credential con. And the UK is the perfect case study.
The 50 Percent Target
In 1999, Prime Minister Tony Blair set a target: 50 percent of young people should attend university by 2010. The number had no basis in evidence. It was not the result of a study or a labor market analysis. It was a round number announced as a goal.
Before this, British university attendance was around 2 percent. University was genuinely free - tuition paid, maintenance grants provided - but it was an elite institution for a narrow slice of the population. The system was inequitable, and everyone knew it.
Blair’s target was an attempt to fix that inequity. The intention, perhaps, was good.
The consequences were predictable to anyone who understood signaling theory.
The Signaling Problem
Michael Spence won the Nobel Prize in 2001 for his work on job-market signaling. His insight was simple: employers cannot directly observe a job candidate’s productivity. They need signals. Education is one of the most powerful signals available, because it requires ability and effort to complete. Even if the education itself teaches nothing useful for the job, the degree signals that the holder is capable of sustained work.
Here is the trick: signaling only works when not everyone has the signal. If everyone has a degree, the degree stops signaling anything. Employers must look for something else - a degree from a more prestigious university, a higher classification, a postgraduate qualification. The bar rises.
This is exactly what happened in the UK after the 50 percent target. More young people got degrees. Employers responded by raising their requirements. Jobs that once required A-levels now required degrees. Jobs that once required any degree now required a 2:1 or a first. The goalposts moved.
The result is credential inflation. The same signal that guaranteed a middle-class job in 1980 barely gets you an interview in 2020. You did not get dumber. The signal got diluted.
Two Ends
The inflation happened at both ends of the system.
At the entry end, entry requirements fell. Universities needed more students to meet the target and capture the tuition fees that came with them. They lowered standards. They admitted students who would not have qualified a decade earlier. The value of "admitted to university" as a signal of ability declined.
At the exit end, degree classifications inflated. Universities faced pressure to award higher grades to keep students happy and maintain their position in rankings. A first-class degree in 2020 was roughly equivalent to a 2:2 in 1990. Employers knew this and adjusted their expectations accordingly. They started demanding 2:1s for jobs that once accepted any degree - and masters degrees for jobs that once required a 2:1.
Neither of these changes had anything to do with the quality of education. They were mechanical consequences of expanding the system beyond the point that the labor market could absorb the output.
Also, the Government couldn’t fund all of that additional education. So education grants were abolished, and student loans (for living costs and tuition) were implemented.
What Was Lost
The UK experiment has been running for over 25 years. We can now see the results clearly.
More young people carry student debt. Their degrees are worth less in the labor market. The jobs they qualify for are the same jobs that previous generations got without degrees. And because the system is now normalized - everyone goes to university - the option of not going has become socially unacceptable in many communities. Young people who would have done well in a trade or technical role are pushed into academic programs that do not suit them. Many of these routes couldn’t compete with the prestige of universities, and the routes - apprenticeship schemes, trade schools, further education establishments - closed. The Further Education college I attended is now a hotel.
The government created the original problem: an elite, class-based system that excluded most young people. It tried to fix it with a blunt instrument: an arbitrary target and a loan system. Each intervention created the next problem. Now the proposed solution to credential inflation is more subsidy, more free tuition, more government intervention - which will produce more credential inflation.
This is what happens when the state tries to centrally plan the education market. The information problem means the planners cannot know how many graduates the economy needs, or what skills they should have. They set a target based on a political judgment, and the market adjusts in ways which could easily have been predicted.
What This Means
The lesson is not that education is bad, or that nobody should go to university. For some people, a degree is genuinely valuable. For some professions, it is essential. But the blanket push to send everyone to university - enforced through subsidy and social pressure - has done measurable damage.
It has inflated the credential that was supposed to help. It has loaded a generation with debt for a depreciating asset. And it has created a system where the people who benefited from the old system (degree-holders) designed a new system that entrenches their advantage: their degrees still signal something because they earned them before the inflation. The people who come after them get less value for more cost.
This is not an argument against education. It is an argument against treating university as a one-size-fits-all solution to inequality. The countries that lifted their people out of poverty did not do it by sending everyone to university. They did it by opening their economies, creating jobs, and letting people work. Formal education helped at the margins. Economic freedom did the heavy lifting.
The next time someone says education is the answer to inequality, ask: adding more degrees to a credential-inflated market - is that really helping, or is it just raising the entry fee?