Are indebted graduates good for the country?

Last week I read an article in the Evening Standard that neatly summarizes some of the growing problems surrounding higher education in the UK.

Firstly the problem of debt. Teaching needs to be funded and as the government cannot afford it themselves, they introduced ‘top-up fees’ in 2006, which most students pay for with student loans. Given that most students also take out loans to cover living costs, this means many who graduated in 2009 onwards will have debts of c.£20,000. That is a massive debt for someone in their early twenties. To pay back the debts, 9% of what a graduate earns over £15,000 is taken directly from their pay check. So someone earning an average of £30k p.a. would take 15 years to pay their student loan. That is one long hangover.

The second, related problem, then is employment. Young people are given statistics like “on average, graduates earn £100,000 more over their lifetime than non-graduates.” This makes a degree sound like a great investment, and sadly many people don’t look at these statistics critically. For one thing, this “average” figure hides a lot of variability, from artists at one end to bankers at the other. Even more fundamentally, this figure does not tell you the marginal benefit gained by going to university. The number of graduates that end up in non-graduate-level jobs seems to be proof that doing a degree is not a good investment for everyone.

As the government prepares to re-examine top-up fees and consider whether to lift the tuition fee cap, what we need is a more critical look at the effect student loans will have on future generations. With the Universities and Lord Browne clearly intent on raising the cap, we need to hear the other side of the story. Luckily, the mainstream media appear to be picking up the story of graduate unemployment in a big way. I will be watching closely to see whether a fair solution can be found.