Higher Education – cost versus value

It’s all well and good for David Lammy to continue to beat a drum for Higher Education but is it not now time to ask what benefit the Government policy of pushing people into University courses, regardless of desire or appropriateness, produces for the individuals or for society?

New data from The Push Student Debt Survey shows that students starting university this autumn can expect to owe £23,000 upon graduation.

Granted, loans do not need to be repaid until graduates are earning £15k p.a. but even then, if graduates were to spend 20% of their take home pay (£1,022.85 per month under the current tax regime) it would take 9 years and 5 months before they had cleared them – assuming no interest. 

9 years and 5 months of paying back 20% of your take home pay.

Of course, that doesn’t take into consideration any pay rises.  But then people are not getting pay rises at the moment.  RPI is currently negative and the Bank of England base rate is negligible.

So perhaps the figure of £15k is unrealistic?  Doesn’t university mean you can write your own pay cheque?

Well, not really, no.  The median salary for a graduate as of July 2009 (using HESA data from 2007 – when the market was still crying out for graduate talent) was £19,300 – so half of all graduates earn less than that (at 20% of that, it would still take seven and a half years to pay back £23k – and 20% still seems an unreasonable commitment.)

Moreover, of the upwards of quarter of a million new grads that have just left university, an overwhelming majority will struggle to find “real” graduate work.  Banking alone has cut its numbers by 28% and the “top recruiters” – only ever responsible for around 20,000 vacancies, may now only offer places to around 15,000.

That’s an awful lot of people who won’t even get the chance to start paying off their debts for a good few years to come, and who, in the meantime, will have little to show for it.  Was it really worth it?