While the youth protests were underway at the Jantar Mantar in the first week of July, the Central government published two crucial reports on higher education enrollment: the All India Survey on Higher Education for 2022-’23 and 2023-’24.The findings were alarming. For the first time since 2011, there has been a decline in the number of Indian students pursuing undergraduate degrees. In 2023-’24, undergraduate enrolment decreased by 93,321 students compared with the previous academic year, representing a decline of 0.29%. This decline at national level might look small. But for a developing country like India enrollments for higher education are supposed to grow fast.Maharashtra was among the states with the sharpest declines: 5% of Class 12 students here did not enroll in the undergraduate enrollment. This means that nearly 200,000 fewer young people in the state opted for degree programmes compared to the previous year. The number dropped from 35,04,046 in 2023-’24 from 36,88,956 in 2022-’23.The case of Maharashtra is striking, as it is one of the most industrially advanced states in the country. It is home to cities such as Mumbai, Pune, Nashik and Aurangabad which provide jobs in the manufacturing and service sectors. The declining importance of degrees among young people in such a state is telling because a graduate degree is a prerequisite for good jobs in the organised sector.Is it possible that these youth simply pivoted to short-term, skill-based certificate or diploma courses? Unfortunately, this is not the case. The same government report shows only an insignificant increase in enrollment in diploma and certificate courses.Why would the vast majority of Maharashtra’s youths turn their backs on higher education and why has this number suddenly swelled?The answer lies either in a waning enthusiasm for education or a decline in the financial capacity of their parents – two factors that are inextricably linked.Most parents evaluate further education as an investment of time and money. If this investment does not yield better employment opportunities and stable jobs, they inevitably question its necessity. When household incomes stagnate or fall, the probability of abandoning higher education rises sharply.In the United States, for instance, approximately 64% of high school graduates enroll in degree-granting institutions (which formally encompass both two-year associate degrees and four-year bachelor’s programmes). This is nearly double India’s rate of gross enrollment ratio for higher education. Across most developed nations, participation in formal post-secondary education is more than twice that of India – and the quality of education delivered is significantly superior.Ironically, the AISHE data was released against the backdrop of reports about the Central government reducing education expenditure as a percentage of the gross domestic product.The decline also makes it clear that graduate degrees have lost their “signaling value”. Theoretically, a degree serves as a signal to the job market, guaranteeing that the holder possesses the knowledge and skills necessary for employment. However, due to the plummeting standards of Indian colleges, degrees have been reduced to a mere minimum formal requirement rather than vouching for a student’s actual competence.Under the present regulatory system, establishing innovative educational institutions that impart the modern skills and knowledge demanded by the market is nearly impossible. Established institutions are shielded from genuine competition. They face no pressure to raise their teaching standards, to update their curricula or to offer innovative teaching methods. As a consequence, passionate educational entrepreneurs are systematically demoralised.Instead, this regulatory framework has been exploited by politicians, who have emerged as the largest suppliers of new educational institutes in the country. This is a dominant cause of the collapsing quality of higher education.Indians often complain about the “commercialisation of education” but this is true only in a limited sense. In a truly free market, poor quality is punished. But in India’s distorted system, institutions can easily survive – and even receive encouragement to expand – without ever providing high-quality education.When the signaling value of a degree diminishes relative to the money and time invested, turning away from higher education becomes a highly rational economic decision for parents and students. They simply choose to exit a broken system. Against this incredibly bleak backdrop, the Cockroach Janata Party effectively placed the quality of education on the political agenda. It is imperative that it stays there for the long haul.Milind Murugkar writes on economic and social issues.