Degrees with benefits?

Posted on December 30, 2009

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According to research by Dr Anthony Hesketh at Lancaster University, graduates “pay for themselves 20 months from their start date and by their third year, mid-sized graduate recruitment and training programmes – those which involve the hiring of 170 graduates – generate a £5.30 return for every £1 invested.”

But how long does it take for graduates to reap similar rewards? Indeed, in a climate of over-supply of graduates, is it at all sensible to get into even greater levels of debt?

As of July 2009, student debt was at an all time high, an average of £23,000, according to The Push Student Debt Survey. However, HECSU data since then has revealed a large proportion of Careers Advisors (81%) have been seeing students who are considering staying on in education rather than trying to get a job in the current market.

In some instances, such as at Glasgow University, this has carried through to a 46% increase in the number of applications for postgraduate courses.

But these too come with a price.

According to the HEFCE, who sampled data from higher education institutions to determine the average fees for different taught postgraduate courses, annual fees for taught postgraduate courses can be as high as £20,000 and, across the sector, the average annual fee for a taught postgraduate course in 2007-08 was £6,220. Factor in living expenses and students are looking at a bill in excess of £20,000 or a total now of £43k and counting.

But then, doesn’t a degree boost your earning power anyway?

Well, maybe…

A study by Universities UK and PWC in 2007 found that graduates do gain average additional earnings of £160,000 over a working life – but arts courses, for example, only afford you a graduate premium of £34,494 over your entire career.

At a recent Penna Barkers Graduate Forum debate attended by a variety of graduate recruiters from RBS and BT to Mercer HR Consulting and Cancer Research UK, the mood was unequivocal.

“If I was advising a graduate who is thinking about doing a Masters or going travelling now” said Martin Thomas, Head of Recruitment at BT, “I would tell them to go travelling.”

And it may make more financial sense too. Recent research by gapyear.com suggests that the cost of a luxury gap year is a comparatively paltry £5,000.

In the face of these kinds of numbers, it’s hard to see just when most graduates could expect to see anything approaching a 500% return on their investment. In fact, it may indeed be far more sensible to go travelling, find some sand, and simply bury your head in it…

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Posted in: Education, Employment