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University of Toronto Professor Brad Inwood is photographed while teaching his Ancient Philosophy Class at the University of Toronto, October 04 2012.Fernando Morales/The Globe and Mail

Her mom wanted her to go into science and become a pharmacist. But after test-driving a number of subjects at Brandon University, Carissa Taylor chose English, with minors in philosophy and theatre. "For me, it's more important to be happy than financially secure," the 21-year-old says. And university, she argues, should not be seen solely as a factory churning out workers. "I always thought of it as knowledge for the sake of knowledge." But she concedes, "It's a little scary that there is really no safe profession to go into."

That frightening reality already has come home to Paul Bradley. With three degrees, at 28, he is working in a Toronto gym, answering the phone and folding towels. But he's also taking online courses at Queen's University to get some additional credentials in religion and French, in hopes of eventually landing a teaching job. Even with a master's in history and another in education, he can't get on a supply list. Hanging over him is nearly $20,000 in debt. And to think, he says, he once looked down on high-school friends for heading west after Grade 12 to land jobs in the oil industry.

"I thought they didn't understand the importance of university. Now, I see them beginning a phase of life I wanted to have right now," he says. "The irony is that there are high-school students doing my same job [at the gym], and I'm qualified to be a high-school teacher. But I have to swallow my pride and let it go."

Encouraged all their lives by politicians, parents and guidance counsellors to go to university, many students are waking up to the fact that their costly years on campus may not open the right doors later.

Canada boasts, deservedly, of creating one of the most educated populations in the world with 56 per cent of people 25 to 34 years old having a postsecondary credential. But as the number of full- and part-time university students now surpasses 1.2 million – with 700,000 more enrolled in community colleges – there is a widespread sense that the country is no longer preparing students with the background, skills and flexibility to become leaders in the global knowledge economy. Being the most educated, it turns out, may not be the same as being the best educated.

This week, six of the country's eight top-ranked universities slipped notably in the standings of the influential Times Higher Education World University Rankings, which prompted several university presidents to argue for a renewed push to develop a more concentrated group of elite Canadian institutions. The idea that Canadian universities can no longer be all things to all students has become a recognized thesis both inside the ivory towers and beyond – that they need to be less bound to lecture halls, more innovative with curriculum and more accountable in the quality of their graduates.

It's not just our postsecondary system at stake. The future of the country will be guided by the debate that is now unfolding, as we radically rethink how we shape the coming generations and enhance Canada's cultural and political life, its scientific frontiers and its ability to compete in a rapidly changing world.

Students, stuffed into lecture halls, complain about not being challenged, not acquiring job skills or not having enough contact with their professors in the early years of their degrees. Faculty members grumble that students arrive from high school unprepared, or prefer to amble leisurely through a four-year degree like consumers ordering an education to go. But professors are often overly focused on research at the expense of teaching and resist new technology.

Employers say many of their newly graduated hires do not arrive with critical skills. In a 2011 survey of 1,000 employers in the United States, 39 per cent said higher education was doing an "only fair" or "poor" job of preparing students for the workplace. In particular, the employers said graduates underperformed in problem-solving and written skills, and abilities such as social intelligence and adaptive thinking. On anecdotal evidence, the problem is at least as bad in Canada.

And that is when jobs materialize at all. As James Côté, co-author of Lowering Higher Education, points out, the government's postsecondary cheerleading solved the supply problem of youth labour by parking them on campus. But it failed to plan for how graduates would find work related to their field of study. Canada has one of the highest graduate underemployment rates among Western countries, swelling the ranks of Keats-quoting baristas.

The proportion of young people working non-permanent, low-wage jobs has doubled in the past decade to nearly 12 per cent in 2011. According to labour-force-survey data, last year 32 per cent of Canadians younger than 30 with a postsecondary credential were either in a temporary job, employed part-time or unemployed. About a quarter of graduates say their degrees are "not at all related" to their jobs.

It's freshman economics: The more BAs that flood the market, the less valuable they become. A university degree is indisputably better than a Grade 12 diploma, and graduates do get jobs – our youth unemployment rate is still lower than that of the United States or Britain. But the sales pitch that university graduates can expect to earn $1-million more over their lifetimes is misleading: Real salary gains vary widely between fields, schools and graduation years – graduating into a moribund economy, as students have recently, has been shown to affect income for life.

Yes, chemical-engineering students can dream comfortably of dollar signs and job security. But their liberal-arts roommates often dip a toe in the frosty job market and scurry back to grad school, or even to community colleges, to gain more practical skills: According to Colleges Ontario, though they remain a small cohort (about 10,000 students), the number of university graduates applying to colleges has increased by 47 per cent since 2007.

"I just anticipated that what I was learning would be valued by employers down the road, and I don't think it necessarily is – or at least not the way it used to be," says Mr. Bradley, the underemployed Toronto teacher. "Now, it's not even that you need to go to university. You need to have postgraduate university before you can settle in."

This phenomenon of credential inflation – in which jobs that did not require degrees even 10 years ago now demand them – is a horse that has left the barn, according to Harvey Weingarten, president of the Higher Education Quality Council of Ontario.

The head of a trucking company told Dr. Weingarten that he hired only university grads as truckers. The cab of a truck is complicated, he said, as are the logistics of warehousing. In any case, "if I have two students come to me, both prepared to be a truck driver and work for x amount of money, and one of them has a degree, why shouldn't I hire the university grad?"

Yet even as degrees have become at once less precious and more indispensable, public funding for higher education has declined – when money is tight, governments pay for hospitals, not lecture halls. The shortfalls have led to ever-rising tuition fees. According to Statistics Canada, tuition rose 4 per cent this year, double the rate of inflation. Student debt now averages $27,000 for a four-year degree.

Many people carry student debt without even a degree to show for it: Nationally, about one in six students drops out or flunks out, most often before their second year (though some later return to school). If they stick it out, much of that time might be wasted, according to one U.S. study that found that 45 per cent of students could not show learning improvements after two years of college and 36 per cent were still languishing near pre-college scores even after four years.

Students are demanding better results, questioning both the value of their courses and the rising cost of a piece of paper that seems worth less and less. The situation has sparked loud dissent, from the protests this spring and summer in Quebec about tuition fees to the part of Occupy Wall Street's critique of economic disparity that highlighted student debt loads.

Universities know they need to change and a growing number are trying out programs to become more results-oriented and responsive to the economy. They are grappling with the balance between teaching Machiavelli and training computer programmers by testing new ideas about how to select students, how curriculum should look, how students study and how to reward teaching without curtailing research.

These are early efforts, trial balloons in the postsecondary lab, but they lead back to a core question: What is the big-picture goal of a public university: to train skilled employees or to create a broadly informed, citizenry? Can it manage to do both?

"Whom does the university serve – the students, their families, the faculty?" asks Ken Coates, the Canada Research Chair in Regional Innovation at the University of Saskatchewan and co-author of Campus Confidential, which explores how the system's failure to manage a growing student population has eroded the quality and value of a degree. "As long as they are publicly funded institutions, shouldn't we be focused on how we serve society as a whole?"

Fretting about higher education was not always a matter of public urgency. When the first university opened in Bologna, Italy, in 1088, all of the students were rich young men. For centuries, higher learning in the Western world was an enterprise for the elite, set off from the rest of society, and taught mostly by monks to train lawyers and physicians and, eventually, scientists.

That began to change in the 20th century, but even by 1930 in Canada, only 2.8 per cent of the population attended the country's 28 universities. The revolution came after the Second World War, when the government rewarded veterans with tuition and universities became publicly funded. The doors opened to women and members of minorities, and the number of universities grew rapidly. From 1955 to 1975, the number of Canadians attending university increased from 73,000 to 370,000 (an additional 220,000 were in college).

Expanding university education was linked to economic growth, but even then, politicians and scholars were raising familiar concerns about the place of university in society, and the impact of rising attendance on the intellectual pursuit of knowledge.

In a speech at the University of British Columbia in 1965, a year after his minority Liberal government created the Canada Student Loan program, then-prime minister Lester B. Pearson emphasized the importance of making university accessible to all qualified students, predicting it would eventually be a natural step after high school – though he also proposed it would be free.

Referring to "revolutionary changes bound to take place," he asked: "Will the emphasis on wise and unhurried teaching and research be replaced by the demand and the dimensions of a knowledge economy?"

In the 10 years after the loan program was introduced, the number of Canadians enrolled in university doubled. The new schools opened in more cities, where they became part of the local economy and culture, and, especially in the 1960s and 1970s, ground zeroes for the civil-rights, free-speech and feminist movements. The new burgeoning crowds of middle-class students – the "massification" of higher education – would alter the fabric of Canadian society, from professionalization to media literacy to parenting styles.

But the way knowledge was imparted did not evolve to keep pace. "Let's say it was the year 1850, just to take a number," says Alan Shepard, the newly appointed president of Montreal's Concordia University and an advocate of postsecondary reform. "You would have gone to lectures. You would have perhaps written papers. You would have sat for final exams." And that is still how it works, for the most part, today.

"There's this paradox," Dr. Shepard says, "where the knowledge itself has been advancing at a pretty rapid clip – what's known, how much is known in all domains, is faster, bigger, bolder – and yet at the same time the mechanisms by which we convey that knowledge, those haven't changed very fast at all."

When classes were small, the lecture-hall model worked relatively well. But in the 1980s, two trends coincided to upend tradition: more students, and fewer public dollars. The entire country was swept up in the promise of a university-educated generation; in 1985, then-Ontario premier David Peterson stood in Toronto's SkyDome for a television commercial, and vowed to fill the stadium's 55,000 seats with postsecondary students.

Since then, in Ontario alone, there has been a 55 per cent increase in the number of students enrolled at university – a trend replicated in every province in the country. From 28 in 1930, there are now nearly 100 universities and degree-granting colleges in the country (plus about 400 community colleges).

The commitment to a public university system, with a space for anyone who wants to go, became the "vision" of every political party, which argued that university graduates would make Canada internationally competitive. But paying for it, especially when the economy was struggling, was a bigger challenge: According to the Canadian Federation of Students, in the 1960s and 1970s, 90 per cent of the cost of postsecondary education was covered by the government; by 2000, the taxpayer's share was 57 per cent, with the difference being made up in tuition alone.

The pressure to raise more tuition dollars, along with public funding that is based on how many students schools accept, only sharpens the tendency to overcrowding.

Given the historical roots of higher education, it is not hard to see why universities are conflicted about their mission. The idea that a degree is a path to a good job has fostered a consumer model of education, that all that cash is paying for a career.

But the loftier ambition of liberal education has always been to create citizens who are well-read, critical thinkers, strong communicators and civically engaged – the qualities Mr. Pearson lauded when he told the students that a degree called on them "to serve their country" and not themselves. "I think it is possible to reconcile these two things," he declared.

Nearly a half-century later, universities are still struggling to figure it out. "What we need are experiments," Dr. Shepard says. "Lots of experiments."

Ask a critic such as James Côté for an example of a school getting it right, and he points to Quest University Canada in Squamish, B.C., where students follow a unique class schedule: They take one course at a time for three weeks each. Classes are small and discussion-based, and often involve field trips. Professors teach across disciplines. But here is the catch: Quest has only 300 students. And they pay $28,000 each year to attend.

Adapting elements of that model – scheduling freedom, faculty flexibility, personalized education – into a mainstream public university with, say, 31,000 students, as at the University of Calgary, is a much trickier matter.

But many of the steps now being proposed or tested cluster around two central notions: First, that universities need to specialize to make programs and departments effective, as well as globally competitive. And second, that there should be clearer mechanisms of accountability to ensure that students, schools, employers and society are all receiving the tangible outcomes they require.

Today in Canada, every university has essentially the same mission: a broadly defined mandate to conduct both research and teaching, and to offer both undergraduate and graduate degrees. Of course, in reality, universities do differ, at least because of the de-facto benefits and limitations of size and location. Mount Allison University in Sackville, N.B., for instance, is known for liberal arts, small classrooms and a close-knit student culture. For a big, urban school experience, by contrast, with the widest range of programs and options, a Canadian student might apply to the University of Toronto, with its 80,000 students spread over several campuses.

If you wanted to study oceanography, you would not go to the University of Saskatchewan. If you're an aboriginal student interested in northern governance, you probably would not apply to Dalhousie University in Halifax.

In the United States, however, the distinctions between different institutions are more clear-cut. First, obviously, there's the split between private, Ivy League institutions such as Harvard, and the public, state-run university systems. But there are finer-grained differences as well. Babson College near Boston, for example, is known for focusing on entrepreneurship – all freshmen take a hands-on course in which they create and plan a new business, which accounts for one-quarter of their first-year marks.

Advocates for differentiation, such as Ian Clark, a public-policy professor at the University of Toronto and co-author of the book Academic Reform, argue that in order to create elite institutions – ones that will land Canada back in the top 20 of world university rankings – there must be a network of high-end schools that are given a priority in research funding, as well as the best faculty and graduate students.

The primary division would be between universities that would de-emphasize research and excel at teaching undergraduates, and research-focused institutions where undergraduates would have to be more self-starting and value their proximity to the top scholars and resources. Different schools might also strike varied balances between online courses and in-person learning.

Glen Murray, Ontario's Minister of Training, Colleges and Universities, has been floating the idea of greater specialization with the province's universities. In fact, he had each of them submit a proposed "strategic mandate agreement" last week.

According to Robert Campbell, the president of Mount Allison University, such a shift could not only allow our research institutions to blossom unimpeded but, importantly, also improve undergraduate programs, which currently get the scraps while prestige and the attention of private donors go to schools' best-developed research facilities.

One hurdle to this approach is faculty reluctance. Today's academics were mainly groomed in systems that rewarded them with status and payment for research while, until recently, neglecting to reward (or train for) teaching.

"The idea that all universities should be the same, that all professors should be researchers, is a wonderful concept, but the reality is we can't afford it as a country," says Dr. Coates, the Campus Confidential author. "What's wrong with a place that takes enormous pride in being the best possible teaching environment? Have a school that is famous for up-skilling its students – if you had a child who was getting 68s in high school but seemed keen on learning, wouldn't you want them to go there?"

Allowing for unique missions for individual universities is an unsettling concept for those who worry about creating a two-tiered system of top schools for the smartest (and likely the richest) and No-Frills U for the rest.

But there could be countervailing advantages: For instance, unique schools could adopt unique admission requirements to target the most suitable students, moving away from putting nearly all the weight on high-school transcripts. This year, the University of British Columbia became the first mainstream university in Canada to require all applicants to submit personal essays and list extracurricular activities, to find better-rounded students.

The most sought-after schools already can demand the highest averages from their students. A more finely tuned admission process might reward other strengths.

More controversially, in a diversified system, tuition levels could be used as a tool to produce different results. For his part, Mount Allison's Dr. Campbell argues that the fees should be deregulated altogether. "We have a kind of tuition phobia in this country," he says. "If you look at the cost pressures on universities and the condition of the public purse, something has to give."

But there could be a more subtle approach – for instance, to encourage students to enroll in sectors that are higher social priorities. That model is used in Estonia, where students in engineering get free tuition, while those who want to take arts have to pay.

"Our system is based on a deification of individual choice," Dr. Coates says. "People get to go where they want to go. We aren't shaping the process."

But if universities are going to set unique missions – and in some cases perhaps even charge more for them – those claims have to be backed up. The fact that universities are funded based on the number of students they accept, not the calibre of graduates they produce, acts as a disincentive for outcome-based learning.

In a specialized system, should students not have more personal choice in how they acquire their degree? Curriculum, as it stands, is largely arbitrary – students graduate when they have attended a set number of lecture hours and acquired a designated number of credits over a required number of years, with marginal variation across programs and institutions. The flexibility to move between disciplines, schools or between colleges and universities is limited – the institutions, after all, want their students to stay put.

But a rigid curriculum structure is an outdated notion, says Dr. Weingarten of the Higher Education Quality Council – especially considering that classes can now be conducted online. In a study at Carnegie Mellon University in Pittsburgh, for instance, students who took an eight-week statistics course online ended up with a better grasp of the material than those who attended 15 weeks of classroom lectures.

Certainly, in a swiftly changing job market, it makes sense to allow students to tailor their degrees. At a minimum, they want the assurance that their degree has not failed to prepare them for a modern economy. Governments, employers and society are on the same page: wanting evidence that their investment in education is returning value.

Says Dr. Weingarten: "It's reasonable for the student to say, 'Look, I gave you $6,000 a year for four years, what did you do for me – other than teach me a bunch of facts and figures?' And it's reasonable for an employer to say, 'Do you actually have the skills that we are looking for?' And frankly, it is also reasonable for a government to say, 'We are putting several billion dollars a year in public postsecondary education. We want students to fuel the social fabric of our community, to fuel the economy – are they graduating with the skill sets we know are important?'

"So it's in everyone's interest to ask this question: Are students learning the things we think they should learn?"

However, accountability at universities runs into the same issue that is faced by elementary and high schools: How do you quantify it? It is still a fuzzy goal. While no one thinks standardized testing is right for higher education, some institutions, such as the University of Texas, have started measuring students' knowledge when they enter and how much more they have learned by the time they leave.

The HECQO has started a similar pilot project with a group of universities in Ontario, and Dr. Weingarten suggests that the information could be used to determine which programs and innovations are working. What's more, if they were published, they would attract students to particular schools and create a general incentive for improvement.

While some schools are rethinking the purely grade-based admissions process, the same could be applied to the other end: Why must every diploma look the same and why must transcripts be an indistinguishable mass of course names and numbers? Online learning can also allow students to pursue extra, resume-boosting credits, for example, with online "badges" awarded for learning specific skills. The Internet company Mozilla is developing a system that would make such badges accessible online to potential employers.

The most pro-active schools are already taking steps to make themselves more accountable from the day students arrive. Recognizing that freshmen are the most likely to drop out or be disengaged, schools have started to step up the hands-on training they offer in their first year, and sustain it throughout a degree.

At the University of Regina, new students are offered a deal. If they agree to be assigned to a counsellor, to take job-training seminars, to volunteer or work and to maintain a minimum average, the university will give them what is called the UR guarantee: If they cannot find a job related to their field, with the university's help, in the six months after they graduate, they will be given a year's free tuition to come back and beef up on missing skills.

"It's not asking you to do anything you shouldn't be doing already," says Elizabeth Morin, a second-year psychology student who is in the program. "But it's easy to get caught up in university and just go to class and study. You need work experience. You need other skills."

In Regina, the program is free: The university expects to make up the cost of the program with improved retention rates. In its first two years, 1,000 students have signed up.

But for many such experiments, argues Concordia's Dr. Shepard, universities will need risk-free cash – he suggests that governments create an innovation fund to permit testing of promising new ideas.

As Lester Pearson predicted, postsecondary education has become the natural step after high school for an ever-growing number of young Canadians. If "massification" was the story of Canada's universities in the 20th century, the challenge of this new century will be to make our behemoth of a system nimble and responsive to the blinding pace and vast possibilities of how knowledge and ideas are exchanged and applied today.

"Throughout history, there have been lots of people diagnosing change," Dr. Shepard says. "But every now and again, they are actually right. They were right when they said the printing press was going to radically transform knowledge and how people connected with ideas. The scientific method was probably the next big thing to come along, in the mid-17th century. And now I think we are on the cusp of radical change."

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