Public has been misled on value of university, says government watchdog
Official figures which claim to show that graduates out-earn non-graduates by more than £10,000 a year are flawed, the Office for Statistics Regulation (OSR) has warned.
The average gap between what graduates earn compared to those without a degree – known as the annual 'graduate premium' figure – has long been used as one of the biggest justifications for going to university.
The Department for Education (DfE) figures claim that average earnings for graduates are consistently above those of non-graduates by around £10,500 a year.
However, as thousands of teenagers sit their A-levels with the hope of going to university this year, the OSR says the 'current framing of the graduate premium has limitations' and it could be 'misleading for users'.
The review comes in response to a challenge to their veracity by Paul Wiltshire, a father of four and an accountant with a degree in maths and statistics.
The ruling from the OSR, which ensures official statistics are trustworthy and valuable, will fuel growing concerns that young people are being oversold the value of university, and that too many are studying 'Mickey Mouse' degrees that offer no solid prospect of high-flying careers.
Reacting to the review, critics called university a 'rip-off' and warned that teenagers are being sold a 'pipedream based on flawed government statistics'.
Prompted by concerns that thousands of students every year were graduating with massive debts but could only find low-paid jobs, he carried out a six-month analysis of graduate outcome statistics.
Mr Wiltshire's research – 'Why is the average Graduate Premium falling?' – blows a hole in the claim that the overall premium is £10,500 a year.
In it, he shows that as university participation began to rise above 30 per cent of the young-adult population around two decades ago, the graduate premium disappeared to an average of zero for the extra graduates in the higher education system.
Official figures show that five years after leaving university, graduates with four As at A-level have a salary range of £33,900 to £61,000, with the median at £47,100. Those with three Bs earn between £25,600 and £43,100. However, for those with three Cs or below, future earnings fall to a range of £21,500 to £34,700.
Mr Wiltshire's analysis shows that around 160,000 of the UK's 2024 student intake of 495,000 will earn around the same as or less than non-graduates, but will be saddled with an average student debt of £45,000.
The 58-year-old sent his analysis to the OSR earlier this year, prompting the body to review the statistics.
The findings of that review say the statistics are flawed and could be giving young people a false impression of the value of their degrees.
The OSR says that as the data set used to compile graduate premium statistics does not take into account prior attainment (A-level results and their equivalents), they are of limited use.
Mr Wiltshire claimed that the flawed graduate premium statistics were selling young people a lie.
'There are multiple reasons why teenagers are choosing the university route as opposed to going into work but the main one is the societal perception that there is a healthy graduate premium,' he told The Telegraph.
'Because of the graduate premium, students are told 'don't worry about the debt, it will be worth your while'. But the case I brought to the OSR and its verdict show that this is a false promise.
'You would have thought that given the importance of the graduate premium statistics in young people's choices, the DfE would have worked harder to ensure they are valid, but they are clearly not. The way they are calculated is fundamentally wrong.'
He added that the concern was not just about so-called Mickey Mouse degrees, but about the supply of 'good degrees' that take no account of the available jobs. For instance, Law Society data show that around 30,000 law graduates each year are chasing just 5,000 traineeships.
'Milking students'
Ed Humpherson, head of the OSR, said he now expects the DfE to make changes to the publication of the data to 'reflect that the statistics should not be used to compare the outcomes of graduates and non-graduates in isolation from prior academic attainment'.
The body also said it 'expects a more comprehensive and accurate definition' of the graduate premium to be used in any future official statistics publications which make use of the term.
Liz Emerson, chief executive of the Intergenerational Foundation, said: 'For too long governments have dangled the promise of a graduate premium to justify milking students with sky-high interest rates, decades of repayments and high repayment rates.
'At the very least the Government should lower the current nine per cent taken from young graduates' pay packets. This research has important implications over the setting of the repayment threshold.'
Ms Emerson added students on a plan-five student loan have to start repaying their loans once earning over £25,000, which 'we believe is far too low', especially given the rise in the minimum wage.
Chris McGovern, chairman of the Campaign for Real Education, said: 'Micky Mouse degrees enrich universities but impoverish debt-laden students.
'Paul Wiltshire has done a huge service for young people by exposing the great university rip-off. It is a rip-off that was aided and abetted by Tony Blair's misguided determination to drive more and more school leavers on to dead-end degree courses.'
John O'Connell, chief executive of the TaxPayers' Alliance, said: 'It's heartbreaking to see that so many young people have been sold a pipedream based on flawed government statistics.
'There are far too many youngsters going to university, too many courses that aren't worth the time or expense, and a taxpayer-underwritten debt mountain piling up, leaving graduates with long-term financial headaches.
'The Government must make sure its statistics reflect the reality of obtaining a university education, which often sees young people with jobs that don't require a degree while saddled with crippling debt.'
A DfE spokesman said: 'We will continue to back our world-class universities as engines of growth and opportunity, however it is vital that students can be confident the significant investment they make in higher education delivers real value for money.
'Our statistics publications are regularly reviewed for accuracy and relevance of content, and we have made clear how the graduate premium statistic should be interpreted.'
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This week, hundreds of thousands of teenagers and their parents will experience a very anxious time as they receive their A-level results on Thursday. For many of the kids involved, the significance of the results will be largely to do with gaining entry to university. For most of them, this is a worthwhile objective. For some, university will completely transform their lives. But not all. The evidence is accumulating that we send far too many young people to university. It was at the Labour Party conference in 1999 that Tony Blair, the then prime minister, announced that he was setting 'a target of 50pc of young adults going into higher education in the next century '. This aim has been achieved. But why the number should be 50pc and not 40pc or 60pc has never been clear. A key motivation behind this objective was economic. The evidence was plain that, on average, graduates earned more than non-graduates. 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If we sent fewer of our young people to university, there would be other savings. There is a huge number of people employed in universities, including teaching staff, who could be released to do other jobs in the economy. Similarly, there are large numbers of buildings which could be repurposed. A key part of the motivation behind young people wanting to go to university – and their parents wanting them to – is economic. That is to say, they wanted to enjoy the so-called graduate premium which has supposedly averaged about £10,500. But countless young people have discovered that there is no such premium for them as they find themselves doing jobs for which a degree is not a requirement and which they could have secured without having one. But by no means is the motivation all economic. Some of it is social. If your mates are all going to university, you will naturally feel a bit odd about not going yourself. But this is a problem that would be alleviated simply by fewer people going to university. There would then be more of your mates who are not going to university. There is also the matter of status for both teenagers and their parents. Mind you, why they think it is so desirable to do a BA in marketing as opposed to becoming a plumber or electrician is quite beyond me. Never mind the graduate premium; why don't we talk about the plumber premium? Moreover, until recently, there has been a move in society to make a degree a requirement for employment in occupations which used to not require them. This is true of the police force and nursing. It really is extraordinary that we should potentially lose excellent recruits into these professions, or waste resources putting them through university. It is bizarre that so many people seem to associate learning in all its guises with the necessity to spend three years, full-time, in an educational establishment from the ages of 18-21. If the purpose of attending university is to acquire skills, then in many cases, these can be acquired much better from short courses interspersed with working, or on the job in the form of an apprenticeship. Whether the role is formally called an apprenticeship or not doesn't really matter. The key point is to learn on the job and to learn from others who are accomplished at it, rather than sitting in a classroom being talked at. This message is slowly beginning to sink in. Some professional accountancy and law firms are now offering non-graduate entrance, and they are referring to such places as 'apprenticeships'. If the purpose of going to university is not to acquire skills but rather to enjoy learning for its own sake and to benefit from the broadening of the mind and of one's interests, then surely this can usefully be done later in life, and not necessarily by attending a university full time. There are not many available policy changes which could bring significant benefits to the economy. But reducing the number of young people going to university is one of them. Quite apart from the waste of so many people's time and money, the accumulation of debts and the necessary write-off by the state of a great deal of debt which can never be repaid, reducing the numbers going to university would release a huge number of people for employment in the workforce. There are currently about 2.4m full-time students in higher education. A 20pc reduction in university numbers would add almost half a million people to the labour force. Of course, going to university can be wonderful. And we have some of the best universities in the world. But not all of them are up to scratch, and not all courses add value for their students. It is high time that our leaders reflected on the fantastic waste of money and resources that following Tony Blair's dream has brought us. For many young people, their life prospects would be brighter if they didn't go to university.
