University students aren’t getting value for money, say MPs
MPs have said that the debt students take on outweighs the benefits they get from a university education.
MPs have said that university graduates in the UK aren't getting a good enough return on their degrees, considering the debts that students take on when studying.
The report points to data from the Office for National Statistics which shows that 49% of recent graduates were not working in graduate jobs (that is, jobs that require a graduate-level education) in 2017.
Right now the average student is facing tuition fees of over £9,000 a year, plus any Maintenance Loans you take out in order to pay for accommodation and other essential living costs.
In fact, as of last year, students were graduating with an average debt of £50,000. As such, the Institute for Fiscal Studies (IFS) predicts that many of you will still be paying your loans back in your 50s, and over 80% of you will never pay the full loan back before it's wiped 30 years after graduation.
Beyond the high cost of studying, the chairman of the Commons education committee, Robert Halfon, has also been very vocal about how the excessive pay of some university vice-chancellors is further reducing degree value for money.
Are students getting ripped off?
Despite the prospect of high debts, many students still choose to attend university because they're told it unlocks access to better career opportunities and higher salaries.
However, new data from the Office of National Statistics has revealed that the salary premium university graduates can expect (the extra money graduates could earn compared with those who didn’t go to university) has almost halved in the last decade.
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So while university tuition fees and the cost of living have been rising, the economic value of a degree has been plummeting.
In the Value for Money in Higher Education report, the National Audit Office states that choosing the 'wrong' course could “lead to poor financial outcomes” for today’s students.
Earlier in the year, Mr Halfon flagged the point that many students were getting “paltry returns” for their degrees and value could “vary wildly” depending on the institution and course.
Why do earnings depend on degree?
The report has warned that the graduate premium varies depending on where and what a student chooses to study.
According to the IFS, median annual earnings five years after graduation are generally much higher among Russell Group university students.
Graduates from the London School of Economics, as well as Oxford and Cambridge, earn an average of over £40,000. For context, the annual salaries of most university's graduates five years after leaving is between £20,000 – £30,000.
There are, however, exceptions to the rule – especially when it comes to specialist universities. The Royal Veterinary College and St George’s, University of London, both of whom are not Russell Group universities, have high earning potential for graduates.
That said, they do specialise in Veterinary Medicine and Medicine respectively, indicating how degree subjects can also have an impact on graduate salaries.
The recent Student Academic Experience Survey (SAES) revealed the degrees which are the best and worst value for money, with Medicine, Dentistry and Veterinary Medicine coming out on top. Conversely, just 28% of graduates feel a Business and Administrative Studies degree represents good value for money.
Nonetheless, Alistair Jarvis, chief executive of Universities UK, told the BBC:
Our universities have a well deserved international reputation for high quality teaching, learning and research, delivered by talented and dedicated staff.
Graduates leaving our universities are also increasingly in demand from employers.
They are more likely to be in employment and earn on average £10,000 each year more than non-graduates.
Why disadvantaged students suffer the most
A spokeswoman for the Department for Education told the BBC that government reforms have seen “record rates” of 18-year-olds from disadvantaged backgrounds attending university.
But, according to the report, students from poorer backgrounds are more likely to go to lower ranking universities – which according to the IFS's predictions, means they will earn less.
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Consequently, shadow education secretary Angela Rayner has urged universities in the UK to focus on supporting disadvantaged students and providing value for money.
Expressing concern about the rising tuition fees which have come in under the Conservative government, Ms Rayner said to the BBC:
The Tories trebled tuition fees and scrapped maintenance grants, leaving the most disadvantaged students with over £57,000 worth of debt when they graduate.
They should start by matching Labour's commitment to bring back maintenance grants, to ensure that everyone, whatever their background, can succeed at university.
What solutions are there?
The Value for Money report said:
Higher education institutions must be more transparent about the labour market returns of their courses.
This is not simply a measure of graduate earnings but of appropriate professional graduate-level and skilled employment destinations.
It stated that sharing this information should be obligatory for all universities.
Mr Halfon has also called for criteria outlining acceptable levels of vice-chancellor pay, following the recent publication of a new voluntary code covering senior staff pay.
The code ensures that if salaries ever diverge from what is set, universities have to provide meaningful explanations as to why this happened.
Mr Halfon told the BBC:
Too many institutions exist where vice-chancellors and senior management earn excessive amounts that does not represent value for either the student or the taxpayer.
Self-regulation should be out of the question, and the Office for Students must enforce strict criteria on acceptable levels of pay that could be linked to average staff pay, performance and other measures.
The government’s upcoming Augur Review, due for next year, will look at the current system under which students take out Tuition Fee Loans.
We wouldn't hold out too much hope, though. The committee has warned that the review’s scope has been limited by the government, meaning it's unlikely to alter the system in a way which will benefit students and graduates.
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It has stated that the review’s recommendations must be aligned with government fiscal policies, and can't affect taxation or anyone who took out loans under the pre-2012 system.
One of the proposals said to be under serious consideration is a move to charge different tuition fees for different subjects.
The idea is to charge higher fees for subjects with higher earning potential, but as we explain, the lower fees for students of subjects with lower earning potential will make very little difference to how much graduates end up repaying.
Do you think that a university education is becoming less and less worthwhile? Let us know in the comments!