Education is mostly signalling

Education serves two purposes:

• Teaching valuable knowledge and skills. This is known as the human capital theory.
• Ranking students according to their ability, conscientiousness and ambition. This is known as signalling theory.

If an apprenticeship is costly, it makes sense to only focus on top applicants. A school could serve to filter students who can learn the best. However, signalling also increases competition. Students may go deeper into debt to get an MA so that they can gain an edge over the competition.