Don’t waste money on university

 

The higher education market is declining and student numbers in Malaysian universities have fallen 7.3% between 2016 and 2023.

Private universities have been particularly squeezed with student enrolments falling 19.6% in the same period.

Enrolment in vocational courses has also declined, by 20.1% for polytechnics and 17.9% for community colleges.

There are many reasons for this but for private universities, value for money is a key driver. The return on investment is often very poor and savvy students see this.

Based on the most recent data someone who enters the workforce straight from school would earn around RM86,300 over the four years they might otherwise spend in university for a foundation course and an ordinary degree in private universities.

Those who go to a private university forego this income and pay tuition fees and other costs over the four year period. They also end up in debt paying for this.

Using tuition fees for a standard business degree, the opportunity cost of private universities ranges from RM135,800 for low-price options through to RM170,300 for mid-price options.

Those opting for Malaysian universities with foreign franchise branding face an opportunity cost of more than RM214,000. Administration and other add-on costs also have to be covered.

The hope is that there will be a reward in terms of higher salaries but average starting salaries for graduates are only RM2,083 per month compared to others in the same age group of RM1,808, a premium of only RM275.

Half of new graduates earn less than RM1,624 per month compared to RM1,527 for their peers, a premium of less than RM100.

Average graduate salaries were around RM4,760 in 2022 compared to RM3,212 overall, a RM1,548 premium per month. At this rate it takes eight to 12 years to recover the opportunity cost of university.

Of course this presupposes that they can get graduate-level jobs but out of almost six million graduates in Malaysia around half face non-graduate outcomes and so do not earn graduate salaries.

They are unemployed, underemployed or outside of the workforce. Against this background it is no mystery why the customer numbers of private universities are falling.

To combat this decline and signal the commercial value of their courses, universities are increasingly depending on foreign branding outfits.

These are not accredited academic organisations, they are private, commercial marketing companies and the signal is often not clear.

In the latest 2025 QS rankings for example, half of Malaysian universities declined or showed no improvement.

More than half had scores so low that they were not reported.

Almost half of universities with high ratings under the QS Stars Rating system have QS Ranking scores so low that they do not make it into the list.

Many universities are resorting to selling certificates from foreign organisations, which are not accredited in Malaysia.

The local universities claim these certificates uplift their own degrees, which raises questions about the quality of the degrees themselves. Furthermore, they are also associated with controversies about validity, recognition and accreditation.

In a world where university education is commercialised students are consumers, not investors.

They can use their consumer power either by choosing low-price options, pushing for lower fees and better quality or simply opting out of university altogether.

This is what many are doing.

It will be for the private universities to respond to this market pressure.

Those in the middle may be squeezed out in favour of low-price options where fees can be as low as RM35,000 to RM40,000.

The high-price universities and foreign franchises will have to prove their worth in order to compete not just with other Malaysian universities but with better, real not franchised, competitors overseas. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.