Expanded Accessibility in Higher Education Disproportionately Burdens Students and Taxpayers
Over the past decade, the increase in university attendance rates has generally led to a lowering of the return on investment (ROI) for graduates compared to non-graduates, particularly due to rising educational costs and a more saturated job market.
Rising Attendance and Costs
University attendance has increased steadily, contributing to higher competition for jobs requiring degrees. At the same time, tuition and related education costs have risen sharply, increasing the financial burden on students and affecting overall ROI.
Variation in ROI by Field
Graduates in high-demand, high-paying fields like STEM, business, technology, healthcare, and finance tend to still see strong ROI, even with rising attendance and costs. Contrastingly, degrees in education, arts, and some humanities often struggle to provide a positive ROI.
Opportunity Cost and Debt
Longer or more expensive degrees increase opportunity cost (lost earnings while studying) and debt levels. The average student debt reported is significant, with graduates carrying an average debt of £80,550 for master's degrees and £208,310 for professional degrees. Certain demographics, such as Black graduates, face disproportionately higher debt burdens and longer repayment times.
Graduate vs. Undergraduate ROI
While university attendance expands access, the escalating cost and a stagnant or competitive job market create a complex investment landscape. Graduate education, in particular, is a "powerful tool for career advancement" but no longer a guaranteed financial success without careful alignment to market demand.
Broader Impact of Attendance Growth
Although not directly quantifying ROI, the expansion of university offerings suggests enhanced opportunities for student engagement and community building, which may indirectly influence enrollment rates but do not offset financial ROI trends.
Current Scenario
Around 160,000 of last year's 495,000 university intake will earn the same as, or less than, non-graduates. In some subjects, the financial return of a degree is close to zero or negative. The surge in the number of university students has vastly increased the supply of graduates, while the number of jobs genuinely requiring degree-level skills has not kept pace.
Perspective
For many school-leavers, starting work at 18 with on-the-job training could deliver better career outcomes than three years accumulating debt for a qualification that lacks market value. The Institute for Fiscal Studies' figures for lifetime earnings for men and women from the mid-2000s are based on a university participation rate of 30%, not today's 50%. Only about 19% of graduate job advertisements now specify a degree subject as an actual requirement.
In summary, the increase in university attendance has diluted some of the financial return benefits for graduates when compared to non-graduates, largely due to rising costs and a crowded job market. However, outcomes still highly depend on field of study, degree level, and career alignment. Non-graduates may avoid high debt but also typically earn less over their lifetimes, so ROI must be considered in terms of total costs, earnings differential, and personal career goals.
[1] The Guardian. (2021, April 26). The university sector is failing its students, says Taxpayers' Alliance. Retrieved from https://www.theguardian.com/education/2021/apr/26/university-sector-is-failing-its-students-says-taxpayers-alliance
[2] The Taxpayers' Alliance. (2021, April). Degrees of Doubt: The Cost of Degrees of Dubious Academic Merit. Retrieved from https://www.taxpayersalliance.com/wp-content/uploads/2021/04/Degrees-of-Doubt_The-Cost-of-Degrees-of-Dubious-Academic-Merit.pdf
[3] Universities UK. (2021). Universities UK Strategy 2030. Retrieved from https://www.universitiesuk.ac.uk/universitiesuk/policy-and-analysis/projects/Pages/universities-uk-strategy-2030.aspx
[4] The Sutton Trust. (2018). The Value of a Degree: A Study of the Economic Benefits of Going to University. Retrieved from https://www.suttontrust.com/wp-content/uploads/2018/04/The-value-of-a-degree-2018.pdf
- The policy and legislation may need to address the increasing costs of education-and-self-development in markets to ensure a positive return on investment (ROI) for graduates.
- The general news often highlights the difference in ROI between graduates and non-graduates, with many articles discussing the value of education in relation to politics and the job market.
- In the face of these challenges, it is crucial for property decision-makers to consider the long-term financial impact of an education degree on prospective tenants or employees, especially considering the varying ROI by field of study.
