Unless you’re an Oxbridge student or taking a course such as medicine or dentistry, chances are you won’t make that much more than a non-graduate, revealed a new report.
In the report, released on Sunday, the Intergenerational Foundation (IF) claimed that paying back student loans cancels out the ‘graduate premium’ for most professions.
According to the independent thinktank’s research, contrary to the commonly cited average of about £400,000 in graduate premium gained over a lifetime, the actual figure was closer to £100,000, amounting to a modest premium of just £2,222 per year before taxes.
The paper added that even this estimate was too generous.
Lift in earnings from degree no longer exists & politicians must stop using as excuse to raise fees/change terms: https://t.co/W8xIrtEO4X
— if.org.uk (@inter_gen) July 31, 2016
“Any politician that dangles the carrot of a graduate premium on future earnings to justify increases in student fees, interest rates on loans, or adjusting student loan repayment thresholds, should be challenged for gross mis-selling,” said Angus Hanton, IF’s co-founder.
To justify recent increases to university tuition fees, it has been touted that a degree boosts employability and salary.
However, the report said that higher qualifications may not guarantee higher pay, as the rising number of graduates was reducing the value of a degree, prompting employers to increase the level of qualifications needed to apply for jobs.
This creates “a self-perpetuating, debt-generating engine” that short-changes young people and loads them down with debt, said Hanton.
The report explained that a wide range of factors influence the extent of a graduate’s premium, such as socio-economic background, gender, job market conditions, field of study, and subsequent career path.
— PoliticsHome (@politicshome) July 31, 2016
When asked for a response to the report, a government spokesman told the BBC: “All of our reports, based on independent data, have shown that a degree continues to give graduates a big earnings boost.”
The spokesman added that this boost amounted to an average of about £170,000 for men and £250,000 for women throughout their career after student loans, taxes and insurance have been taken into account.
He also said that the government was in the midst of introducing reforms to the higher education system, such as implementing a ‘teaching excellence framework’ to assess universities’ ability to equip students with the skills employers are looking for.
The government has also gotten rid of maintenance grants for students from lower-income backgrounds, sparking protests from student organizations.
The National Union of Students (NUS) said that scrapping the grants would saddle poorer students “with a lifetime of debt”.
Maintenance grants scrapped for poorest students https://t.co/De0DgOhjN3
— The Guardian (@guardian) August 1, 2016
Effective from August 1, the grants, which were worth around £3,500 per student, will be replaced with loans that will have to be paid back at the end of an undergraduate course once graduates earn annual wages exceeding £21,000.
NUS vice president Sorana Vieru told BBC Breakfast: “It could put off students from underprivileged backgrounds from applying, who might not understand how the loan system works, or are very debt-averse. We also know that mature students are way more debt-averse than younger students and BME (black and minority ethnic) students perceive student debt on a par with commercial debt.”
The Higher Education Policy Institute’s Director, Nick Hillman, said that students would actually have more money in their pocket during their studies, despite the withdrawal of the grants.
“In the past they had about £7,500, in future they will have £8,200. But it will all have to be paid back if they get a well-paid job, whereas in the past around £3,000 or so did not have to be paid back,” he said, as quoted by The Guardian.
Tuition fees at universities across the UK vary: in England and Wales, it’s currently capped at £9,000 a year, while students in Northern Ireland pay around £3,925 a year. Meanwhile, Scotland does not charge fees for Scottish undergraduates under the age of 25.
Image via Associated Press