Latest news with #graduatepremium
Telegraph
5 days ago
- Business
- Telegraph
So now it's official. The ‘graduate premium' is a myth
Have you ever thought about the main reason why school leavers keep choosing to go to university and higher education (HE) participation rates continue rising? Of course there are many reasons; a chance for young adults to get away from their parents, ease of application and acceptance, it looks more fun than going to work, an interest in the subject… But what is the main driver that underpins society's messaging and ends up channelling 18-year-olds into university rather than the workforce? Well, it's the perception that there is a 'graduate premium'; and put simply, the narrative goes like this – 'Don't worry about the debt, you're going to get paid more to make up for it'. And the HE sector well knows the importance of maintaining the societal belief in the graduate premium to drive up their customer numbers. They are relentless in their efforts, issuing constant public comments, articles and self-commissioned reports, often via sympathetic think-tanks, claiming the limitless powers of HE to deliver a graduate premium to all who enrol. But this positive advertising is starting to contrast starkly with increasing evidence, now in plain sight, of graduates' difficulties getting jobs as well as the low pay on offer of not much above minimum wage. There is a growing realisation that we are burdening too many of our young adults with morale-sapping student debt for their whole working life, with little or no corresponding improvement in their career prospects. There are also concerns that we are building up a dangerous stockpile of student loans that won't be repaid, only for the taxpayer to pick up the tab. Meanwhile, money is flowing freely into the bloated HE sector via unwitting students being used as pawns. The Government has announced a White Paper due out this summer regarding Post-16 Education. So given the importance of the notion of a graduate premium, you would assume that the Government has ensured there is robust informative data to inform policy-making. Well, sadly not. There is only one Government report, the annual Graduate Labour Market Statistics, which attempts to quantify the graduate premium; and my research shows that it is fundamentally flawed. Some will say that the IFS Graduate Lifetime Earnings report from 2020 also 'proves' a graduate premium, but my research argues that it is just as flawed. My findings are already supported by the Royal Statistical Society, and the Office for Statistics Regulation (OSR) has also found a case in my favour and agreed that there is a problem with graduate premium data. The OSR has intervened and forced the hand of the Department for Education (DfE), who admitted in their release today that their figures are misleading – and to such an extent that even though this has been a mainstay of graduate outcome reporting since 2007, they have decided to cease publication. The DfE have agreed that a report demonstrating the difference between the career pay outcomes of those with equivalent A-level results is necessary, and they intend to produce it as part of their LEO data e.g. comparing school leavers with three Cs who attended university and those that did not. But the inadequacy of the data doesn't stop there. Using mathematical modelling, I've found that since we surpassed 30 per cent HE participation as long as 20 years ago, the marginal graduates added – increasingly being drawn from school leavers with relatively lower prior academic attainment – haven't earnt any graduate premium at all on average. Yet this phenomenon isn't explored in official Government statistics. When graduates do earn a premium, there is still the age-old statistical issue that correlation does not prove causation. For the majority of graduates, the job they end up doing will have no meaningful connection to the degree subject itself. So you must question why the official Government statistics keep churning out data that implies that studying for a degree was the main causation reason for the higher earnings, whereas in fact it is more likely their pre-existing attributes such as academic ability and ambition. Furthermore, when there is a link between the degree subject and the graduate's career, did they genuinely need to study academically for three whole years at great cost to themselves beforehand? Couldn't the course have been far shorter? And to what extent could it have been cheaper and more effective for them to start work at 18 and learn from colleagues, undergoing job-based formal and informal training in order to progress? You can often learn far more in three weeks of doing the job than you can in three years of theoretical study. The existing statistics don't explore this at all and by implication see their main role as demonstrating what degree is better than another. They act on the assumption that for non-manual work, everybody should get a 3-year degree before entering the workplace, rather than whether a degree is necessary at all. Until now, these inadequate statistics have allowed the sector to hijack the official figures and mislead the public and Government regarding the benefits of higher education, claiming that 'everybody' will be able to benefit from the supposed average premium. What is needed is root and branch reform of graduate statistics. I believe it would provide compelling evidence that surpassing around 25-30 per cent HE participation was a monumental mistake, and we certainly should never have let it reach the existing 50 per cent. The vicious spiral of never-ending increasing participation is condemning ever more of our young adults to pay huge amounts for unnecessary degrees. The Government's ideologically driven policies are led by a misguided false notion of 'opportunity for all'; but in the hands of a commercially-driven sector it has become a gross exercise in mass exploitation. The only way for this to end is for the Government to introduce a sensible, pragmatic cap on student numbers, calculated based on useful data – not the misleading data currently being produced. Paul Wiltshire is a parent campaigner against Mass HE and is the author of 'Why is the average Graduate Premium falling'
Telegraph
31-05-2025
- Business
- Telegraph
Public has been misled on value of university, says government watchdog
The public are being 'misled' over the value of university education, the Government's statistics watchdog has ruled. 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.'
Telegraph
15-05-2025
- Business
- Telegraph
There's more to university than the promise of a well-paid job
When I was 18, doggedly indolent and on course to fail all my A-levels, my father staged an intervention. Lowering himself onto his knees before me like a supplicant monk, he knitted his hands together in prayer. 'All you have to do,' he begged, 'is enough revision to scrape through these exams. And then you can spend three years at university doing absolutely nothing.' It was a brilliantly effective pep talk at the time. But no part of it rings true today. My eldest child is 17, and weighing up possible degree courses. To get into a Russell Group university, he will need a fat bouquet of A-grades: there can be no question of cramming, bluffing or scraping through. Once in, he will have to pay £9,535 a year in tuition fees, which is hardly conducive to relaxation. Undergraduates have become much more serious-minded and diligent since the introduction of student loans in 1998. A good thing, no doubt, except that their virtue is not being rewarded. The so-called 'graduate premium' – the difference in average salaries between people who attended university and those who didn't – has been shrinking for decades, and now seems to have gone into reverse. Nearly three-quarters of new graduates earn less than £29,120: the median salary for people aged 22 to 29. Even three years later, they lag behind their peers who went straight from school to work. Some degrees are more valuable than others: the boring ones. Computer science, business, maths and economics are the top salary-boosters. Whereas a degree in philosophy – my son's chosen subject – is likely to shave a couple of thousand a year off his starting salary. A responsible mother, in fact, would be on her knees begging him not to get into university. And yet, for reasons of nostalgia more than common sense, I can't help wanting him to have those three years between school and work. Not just the extra education, but the extra time. I want him to experience the luxury (which it really is now, almost to the point of decadence) of playing at being a grown up, among your peers, far away from home. Even though my years at Newcastle University were just as academically idle as predicted, I acquired skills and memories that set me up for life. How to pay a bill, how to live with other people, how to make friends with boys. Time was so abundant that it ceased to feel progressive and became more like a soft, settled atmosphere: one composed of my flat mates' voices, the smell of old cigarettes, a strip of sunlight moving across the bedroom ceiling. And parties and drugs and snogging too – all of which was instantly anecdotalised, so that we often seemed to be laughing at our misspent youth even as we were living it. University is such a generous interregnum. It comes just at the right moment, when you are composing the internal mythology that will sustain your self-image. It gives you a last shot at making a gang of friends, before you move into the more fragmented social milieu of work. None of this shows up on the fiscal balance sheet, of course. In terms of earning power, it is nothing but a waste of billable time. Worthless, and yet – I still believe – infinitely precious.
