A bachelor's degree is a very expensive piece of paper. According to Lord Browne's report on Securing a Sustainable Future for Higher Education in England, on average an undergraduate degree course at a UK university costs £7,000 per student per year to run. The Higher Education Funding Council for England, suggests a slightly higher figure of £7,300 per year.
For the graduate, higher education has obvious benefits. David Willetts, the Universities and Science Minister, has emphasised that over their lifetime graduates earn an average of £100,000 more than people who do not have a degree.
In addition to their higher pay, graduates face a lower risk of unemployment, are more likely to be in high-level positions using their university-acquired skills, receive more job-related training and also have greater promotion prospects than non-graduates.
Graduates aren't just more affluent than those who haven't studied at university. By the age of 30, a person educated to GCSE level is 75% more likely to be a smoker, while graduates are less likely to be obese, with 3% lower Body Mass Index on average. In addition, graduates are between 35% (women) and 55% (men) less likely to suffer from depression.
In summary, we can say that, on average:
- It costs £21-22,000 per student to run a three year degree programme
- A graduate will take home £100,000 more over the course of their career than a non-graduate
- Graduates face lower prospects of unemployment and higher chances of promotion, and will receive more job-related training
- Degree holders enjoy better physical and mental health
Clearly the graduate enjoys great personal benefits from tertiary education. So why should the taxpayer, who in most cases will not have had the privilege of studying at a university themselves, pay for it?
Let's look at those private benefits again. The extra £100,000 a graduate earns over their lifetime is calculated after tax. In fact, the Organisation for Economic Co-operation and Development (OECD) annual report 'Education at a Glance' states that "The net public return is almost three times the cost of investing in tertiary education". The £100,000 figure also does not take into account the cost of tuition fees and maintenance loans, currently estimated to leave each graduate with £25,000 of debt, rising in many cases to over £40,000 under the new fees system which will be implemented from 2012. The BBC also published a study which showed that, when interest is factored in, under the new system graduates face paying back double what they borrowed – over £80,000. This may be a worse case scenario and, hopefully, won't be a typical graduate experience, but it has left some financial advisors questioning whether the benefits of a degree are worth the cost.
The side benefits of higher education enjoyed by the graduate have a monetary value for the taxpayer. The lower chances of unemployment and better health mean that the graduate is less likely to be reliant on public healthcare or income support and therefore draw less on public money.
The benefits of higher education are also passed onto the children of graduates. Graduate families (defined as families where at least one parent is educated to degree level) are more engaged with their child’s education – they are more involved with school work, more often read to the child at night when they were younger, and more regularly attend parents evenings. As a result, the children are more likely to have good attendance at school and are far more likely to do well at GCSE.
Beyond the family, graduates are around 3 times more likely to be a member of a voluntary organisation than someone educated to GCSE level or below,and are between 30% and 40% more likely to hold positive attitudes to race and gender equality. They were also less blindly accepting of authority and less politically cynical.
Universities play a key role in social mobility. Social mobility's effect of making the UK a fairer and more meritocratic society is seen by many as an end in itself, but a study by Boston Consulting Group found that improving levels of social mobility for future generations in the UKwould boost the economy by up to £140 billion a year by 2050 in today’s prices, or an additional four per cent of Gross Domestic Product (GDP) over and above any other growth.
Finally, our economy needs graduates. Employers benefit from university education through a more productive and healthy workforce; highly-skilled workers more quickly adapt to new tasks and technologies, and are themselves a direct source of innovation. Further, there is compelling evidence to show how education investment results in higher economic growth rates for the economy as a whole, and one report attributed higher education as being the most important in OECD countries. Indeed, the Browne Report quotes research showing that in the UK between 2000 and 2007, the increase in employed university graduates accounted for 6% of growth in the private sector or £4.2bn of extra output.
In summary, we can say that, on average:
- Graduates contribute more in tax than non-graduates, more than enough to cover the cost of their education
- Better health and employment prospects mean graduates draw less on public health and income support programmes
- Graduates are 30% and 40% more likely to hold positive attitudes to race and gender equality and are less blindly accepting of authority and less politically cynical
- Universities drive social mobility, making society fairer and boosting the economy
- Investment in higher education results in higher economic growth rates
At a time when soaring tuition fees and graduate debt lead both school leavers and financial advisors questioning whether or not a degree is worth the cost, when the UK's economy faces rising competion from highly-skilled workers in China and India - the so-called Global Skills Race - perhaps the real question we should be asking is not whether the taxpayer should fund higher education, but can we afford not to.
