So predictable, so rote is the newspaper coverage of exam season that I can only presume editors of mid-market newspapers have to sit their own A-level on how to report them. Shots of exuberant blondes jumping up and down clutching their results? That gets you a basic pass. Fancy-that story about an Asian lad with top grades in maths and science – even though he's only 10 and in all likelihood faces an adolescence of Belmarsh-style bullying? Now you're up to a B. Oh, and the conviction that university is the best place for any 18-year-old? Bingo: you've scored the A* required for a place at Associated Newspapers.

To be fair to journalists (and this thing goes far wider than the Daily Mail), that last belief is not theirs alone; it's shared by prime ministers and civil servants alike. Even before Tony "education, education, education" Blair set a target that half of all school leavers would go to university, it was John Major who presided over a huge expansion of higher education. Official thinking was best summed up by an official report for the Treasury published in 2006: "The UK must become a world leader in skills. Skills is the most important lever within our control to create wealth and reduce social deprivation." Going to university was not only a teenager's lucky ticket to the top jobs; it would make the economy more dynamic. It was practically in the national interest.

And plenty of parents were ready to do their patriotic duty and send Jack and Emily off to college. Over the last couple of decades, attending university has become almost a rite of passage, with well over 40% of school-leavers toddling off to collect a degree – investing three or more years and racking up tens of thousands of pounds of debt in the process.

Except that 20 years into this historic expansion of the higher- education system, the evidence is that a big proportion of those freshly minted degrees have not repaid either the hopes or the tuition fees and student loans invested in them. Quite the opposite: one in three graduates are now in jobs that before the 90s would not have required a degree at all.

A couple of years ago, two economists at the University of Kent crunched through data from 1992 up to 2006 on how graduates fared in the jobs market. It was a big exercise, going through thousands of career paths, and it was carefully done. Francis Green and Yu Zhu took into account that it can take a while for graduates to find the right job (or, as their parents might more precisely refer to it, to switch off E4). Yet they still found a third of graduates were "overqualified" for their jobs. Many were "formally overqualified", in positions that wouldn't usually require a university degree; but one in 10 were what Green and Zhu called "really overqualified" – their jobs barely utilised their expensively acquired skills.

Just look at the occupations where new recruits are now expected to have a degree: policing, nursing, hotel management. And the list is growing fast: researchers report that the smarter estate agents now prefer staff to have degrees (and a public school education too, apparently, "for the added confidence"). Those from the upper- and middle-classes who go to Oxbridge will do fine – as they were always going to do. But Blair's dream of a working-class kid getting a degree that would catapult him or her up the social ladder has not come off. Instead, they'll probably end up doing similar work to their school-leaver parents – only with a debilitatingly large debt around their necks. Meanwhile, their schoolmates who left at 18 will find themselves locked out from the jobs they would once have been amply qualified to take up. The lack of letters after their name now signals a lack of talent.

What about the extra money that degree-holders are meant to earn over their careers – the so-called graduate premium? Even by Whitehall calculations, that has dropped from £400,000, to £100,000 now – which works out to an annual £2,500 over a 40-year career. But even that more modest average is swollen by the number of Oxbridge students who end up at Goldman Sachs.

Ewart Keep, an economist at Cardiff, takes the example of a young man who studied history or social science at a former poly and comes out with a middling degree: "Statistically, he's unlikely to earn any more than if he'd simply left school at 18." Keep, together with his colleague Ken Mayhew, argues that the reason the Great Degree Scramble has not paid off in better jobs is because Labour did not try to provide them. That would have required nurturing new businesses and raising conditions for the most awful jobs – the sort of thing Blair and his party emphatically did not do.

The scramble for degrees resembles the audience at a theatre standing up: as each row stands up, those behind them have to get up on their hind legs too – so that no one can see the play any better but everyone is a lot more uncomfortable. That metaphor comes from the Cambridge economist Ha-Joon Chang who, in his new book 23 Things They Don't Tell You About Capitalism, points out that plenty of economies have prospered without forcing their young into university. Up until the mid-90s, Switzerland – one of the richest and most industrialised nations in the world – sent only 10-15% of students off to get a degree. But it made sure the others had apprenticeships with actual businesses and vocational training. There must, surely, be a lesson in that.