The Intergenerational Foundation has written a paper and produced a report ‘‘challenges the £100,000 lifetime graduate earnings premium so often used by politicians to justify increasing fees for university courses, changing the terms and conditions, or increasing interest rates.
A wide range of factors influence whether a graduate is likely to receive an earnings premium. These include, amongst others, pre-university education, the higher education institution attended, socio-economic background, gender, ethnicity, subject choice, degree result, work experience undertaken, the supply of graduates in the labour market, chosen career path and conditions in the employment market at the time.
This paper finds that, apart from Oxbridge, medical and dentistry graduates, there is no guaranteed graduate earnings premium for the many young people entering higher education. It begs the question as to why the government is encouraging 50% higher education participation rates if the employment market is not providing graduate-level pay in return for student investment.
The UK now finds itself with more over-qualified workers than any OECD country other than Japan, with graduates under increasing pressure to undertake further post-graduate study – MAs/MScs – in order to further set themselves apart from their peers, thereby incurring yet more debt.
The paper concludes that the UK risks creating a self-perpetuating debt-generating engine that serves only those who run it, while leaving graduates from poorer background to pay an extra 9% graduate tax on earnings over £21,000 for the next 30 years.”
In short it would seem that UK graduates are at a financial disadvantage to non-UK graduates. Whereas Non-UK graduates who live and work in the UK earning over £21,000 will just pay income tax and National Insurance, UK graduates earning over £21,000 will now pay income tax, National Insurance and the Graduate Tax, which means that for the same income they will realise less, which in turn will affect their ability to get credit, a mortgage and standard of living.
The full report may be found here
By the Intergenerational Foundation
2 Comments
Great timely article. For many students it is crunch time with ‘A’ level results out. A three-year undergraduate course in the UK can cost up to £27,000 in tuition fees, with graduates in England facing the highest debt in the English-speaking world. But is it worth it?
If you believe that going to university is about more than just getting a job, perhaps it is money well spent.
The Depart for Business latest stats comparing the labour market for graduate and non-graduates in 2015:
Graduate unemployment: 3.1%
Non-graduate unemployment: 6.4%
Young graduates: 56% in high skill jobs, 31% in medium and low skill jobs
Young non-graduates: 17% in high skill jobs, 54% in medium and low skill jobs
The median salary for young graduates was £24,000, that’s £6,000 more than for non-graduates. However, the average graduate salary hasn’t really increased since 2008.
Thanks for that