Personal Account

Yes, the debt looks scary and so does the jobs market – but don’t let that put you off university

Won’t somebody please think of the children? Forced to miss their summer term, skip the exams they worked so hard for and accept grades based on their school’s historic performance rather than their own abilities, they must now decide whether to rack up £55,000 of debt for a degree taught remotely. Will they have that glorious, hellish experience of freshers’ week, the chance to run societies and compete in sports and edit newspapers, or a social life with the kinds of people they have never met before and may never meet again?

I too started university just as the country fell into a recession, packing my parents’ car and trundling up to Cambridge in October 2008 – although I had finished school a year earlier with the opportunity to sit my A-levels and work for my grades.

Much of what was said about that time is being said again today. Those leaving education are tumbling into the worst jobs market in more than a decade, with thousands more redundancies expected once the furlough scheme ends in October.

But this recession is different, which should put the minds of school leavers – and everyone else – at ease.

In 2008 the recession started with a 0.2pc economic contraction in the second quarter and a 1.7pc fall in the third, hardly as catastrophic as this year’s 2.2pc followed by 20.4pc. But that recession lasted for five quarters, while this one was over before it began. Not only was it the result of a forced shutdown of businesses rather than any natural factors, but output rose in May and banked an unprecedented 8.7pc gain in June. The pickup should continue into the start of the third quarter, as the hospitality and leisure sectors did not reopen until July.

Nevertheless, many students will be questioning whether it’s worth taking on tens of thousands of pounds of debt, with an interest rate near 6pc, to study for a degree that is considerably more expensive than it was in my day and may offer a lesser experience because of social distancing measures – and may not even improve their chances of employment at the other end.

If this is you, or your child or grandchild, remember one thing: student debt is not like other debt, as we explain on page 3. Graduates tend to out-earn peers who have not gone through higher education, but those who don’t will pay back less. More than two thirds of graduates do not repay the full amount of their loan.

There may be reasons teenagers choose not to go to university, but the price tag shouldn’t be one of them. And those worried about graduating into a jobs crisis might do better to spend three years at university – learning their chosen subject and so much more – to give the current employment climate time to recover.

I don’t envy today’s crop of school leavers. But they should look past the headline figures and hold their breath for an imminent return to normal. Before long, we’ll be able to look back on this generation and say the kids are all right.

The current recession is different, which should put school leavers at ease