Universities need to take a stake in students’ success
THE education landscape has changed hugely within our lifetimes. The abolition of grammar schools and the introduction of academies and GCSEs were major reforms. But the most dramatic change has been in our universities.
In 1980, just 15 per cent of school leavers stayed in fulltime education. Universities were regarded as the preserve of a small minority, the brightest in the land.
That all changed when Tony Blair became prime minister in 1997. Blair was determined that the majority of school leavers should go to university – a change astonishing in its success.
Last year a record 570,475 started a university course – over 55 per cent of all school leavers. A university degree is no longer the exception but the rule.
The merits or otherwise of this have been debated for years. Whatever your view, the fact is that under the current system, students leave univer- sity heavily in debt, with the typical student in the UK now owing £45,000 (compared to £28,000 in the US).
So there is an obvious question, which has barely been asked: are students getting value? In other words, is it worth the indebtedness?
YESTERDAY the Centre for Policy Studies published a fascinating report that looked at the facts. They examined specific degree courses at specific universities and looked at how likely graduates are to get a job afterwards, how much they will earn, how much would be the benefit overall from their degree – and conversely, how much some would be likely to lose.
The CPS results make for stark but vital reading. They show that the increase in student numbers has led universities to prioritise the recruitment of undergraduates above the quality of the courses they will take, and above the employment outcomes of those courses. Take for example one subject that has become increasingly popular in recent years: creative arts. The CPS – whose number crunching was done by the Institute for Fiscal Studies – found that men who study this earn on average £94,000 less over their lifetimes than if they hadn’t studied (there was zero impact for women).
Astonishingly, overall, 20 per cent of current undergraduates will actually be poorer as a result of doing a degree. Many others will only earn a “trivial” amount more for having gone to university, and will have had to take on a huge debt to do so.
Because many students never earn enough to pay off their debt – the earnings threshold under which you are exempted is £27,288 a year – approximately 54 per cent of the value of students’ loans is written off and paid by the taxpayer. That amounts to £8 billion a year. So both students and taxpayers alike are spending a fortune making themselves poorer.
It is important to be clear that universities should not only be about maximising students’ earnings potential. At university you should be able to study subjects that have no direct relevance to the jobs market – but in the knowledge of what it might cost you. Some subjects, such as history or English, might be both intellectually stimulating and have decent employment prospects afterwards. But as this report shows, too many courses offer neither stimulation nor future rewards.
Take creative arts again. It has the largest taxpayer subsidy of any subject at £1.2billion. Its very failure to produce graduates who earn a decent salary means it attracts a greater subsidy at £37,000 per student, compared to £11,000 for engineers.
But there is a deeper concern, and it’s about why there are so many poor courses.
At the moment, universities are incentivised to keep increasing student numbers as that leads to more tuition fees (via student loans).
IT makes no difference to the university what happens to the student afterwards. If the student is worse off as a result, the taxpayer still pays off the rest of the loan.
The CPS report suggests a remedy: that the money should be loaned directly to universities, which would then loan it to their students. After they leave, students would repay the universities rather than the Government – and the universities would repay the Government.
That would make the system pay for itself, as universities would no longer be incentivised to increase numbers. They would have to take care that their courses were value for money and ensure that they would be a worthwhile investment for students.
At the moment, too many students are being enticed into doing degrees that can actively harm their career and earning prospects. For them, something has to change – and soon.
‘20 per cent of undergraduates will be poorer by doing a degree’