Governments support higher education because most think it’s economically beneficial and produces a culturally sophisticated population.

The economic reasoning partially assumes not enough education would exist without government funding. Like polluting industries, we’re better off with them, but the free market already creates plenty without the extra help.

It’s hard to take the cultural argument seriously. Look at most university graduates and tell me they’re reading Derek Parfit and listening to Bach in their free time.

Something we all know and don’t discuss: most of what we learned in school was useless. Your knowledge of Henry VIII has likely never helped you - certainly no more than anything else you could have done with the time you spent learning it.

I empathise with those who have assumed that school must be doing something to people. Why else do profit-motivated companies pay graduates more if not because they’re better? Bryan Caplan succinctly explains:

You can increase the value of a diamond in two ways: cut it to perfection, or pay an appraiser to attest to its flawlessness.

Education is the latter option: it filters out the lazy, non-conformist, and unintelligent. It’s a signal. No sensible economist argues the only thing that higher education does is signal: there is something to be said for the human capital (cutting to perfection) side of the story. Depending on the ratio, governments might be fuelling a credential arms race where more and more education is needed to signal better than the other candidates, despite minimal return to society because the human capital increase is so minor.

Intuitively, you know school is at least partially signalling. What else explains why people aren’t stealing world-class attention by attending university lectures without paying or why the final year is much more lucrative than any other? 

More education significantly increases a person’s income, yet it has a minimal effect on national income. An extra irrelevant qualification for one person secures them a place over the other candidate without it. However, not only does it do nothing to add to the economy, it costs the time the person wasted attaining it, plus whatever the government contributed to it.

Markets have many critics, but it’s hard to argue that something as ostensibly valuable as education would fail to fund itself if it did what it promised; made more skilled workers. Some will attest to education’s other social benefits: crime reduction, health, etc. For a thorough debunking, read the previously referenced Caplan’s book, The Case Against Education.

Some people might accept the arguments and reply, “we need to improve education, not remove funding”. Fixing things is, at best, extremely challenging. Often it is beyond anybody’s will or ability. It’s better not to throw millions of pounds at something, hoping it could be better in the future. Stop the bleeding, and then assess.