Is University Worth it?

The financial turmoil of Covid-19 has made the job market a tricky place for recent graduates. A mass reduction in hiring from revenue losses, alongside redundancies across the board, has meant that the once competitive ‘grad job’ is now gold dust.

Our survey found that over 30% of postgraduates did not need a degree to do their current job, and a further 46% of postgraduates did not think that their university education was worth the money¹.

The data suggests many postgraduates are now having to start their careers with whatever job they can find: often positions they could have achieved with their A-levels or GCSEs.

After graduating from university, the average student debt is £46,884². This begs the question, is university really worth it?

Does a degree actually help you find a better job?

The story told to teens throughout the country is to go to university, graduate - and secure a role that you wouldn't have been able to achieve without higher education.

Previously this might have been true, but a report from the Office For National Statistics suggests that coronavirus is stopping many graduates from reaching employment. At the start of 2020, before Covid-19, the unemployment rate of recent graduates was around 7%. Towards the end of 2020, this grew to 12%.
To put this into context - total unemployment only increased from 4% to 5% during the same period³:

Backing this up further, a report last month from the Office For Students reports that over 24.3% of postgraduates from the 2018-19 cohort did not go on to ‘professional employment’⁴ or further studies within 15 months of graduating⁵.

Unsurprisingly, the group of students who graduated in the last couple of years may not be seeing their university education as worth it.

Do you earn more as a graduate?

Despite the above, the historical data in the university debate paints a prettier picture. Numbers from the Department for Education⁶ state that working-age graduates aged 16-64 earned a median salary of £34,000 in 2018. Their non-graduate peers chose a different path earning a median salary of £24,000.

Despite hefty debt, many postgraduates would likely see the extra 10k per year worth it, as after tax, within 7-8 years, you would have likely earned back the cost. To add to this - the further you get into your career, the more you see the salary benefits; take the following study from the Higher Education Statistics Agency:

The majority of postgraduates aged 21-24 years old earned between £21-27k, but once aged 25+ the most likely earning is £39k+. Once you’re on the ladder of graduate jobs, wage progression is often fairly lucrative.

Does it matter what you studied, or where you went to university?

The same report from the Office For Students looking at the 2019 cohort suggests that this does matter, with postgraduates from particular universities and study subjects finding a graduate job or further studies more easily. Take the top 10 subjects by ‘progression rate’, for example. This is where a graduate reaches professional employment or further studies within 15 months of leaving university:

If you have a healthcare or scientific degree, you’re far more likely to ‘progress’. The same goes for the top or highly specialised universities, where around 90% of graduates immediately go into professional employment or further studies:

Given that most courses are the same price, circa £9k per year, where you go and what you study does make a difference in the ‘worth it’ debate.

Location & gender

Our survey found that those living in London were more likely to have found their degree beneficial:

61% of postgraduates in London strongly agreed that they needed their specific degree to undertake their current job responsibilities.

Graduate employment opportunities are more in supply in London: but in fairness, there may be some skew from postgraduates who moved to London following a job offer. Interestingly, there is some gender bias in our survey results:

63.05% of female postgraduate respondents stating that they are not using their specific degree in their career, compared to around 50% for male respondents.

A factor in this may be the study subjects between the genders - as we know, the split in science, technology, engineering, and mathematics subjects is 65:35 male:female. Also, From our earlier analysis, more technical subjects tend to have higher ‘progression rates’.

Summary

Postgraduates in the last two years are definitely having a tough time. There are countless stories of recent postgraduates attending tens of interviews and still not getting a job - the ONS also suggest that 12% of recent graduates are unemployed.

However, this scale of unemployment is hopefully a short-term slump from Covid-19, and you would expect that moving into 2022-2023, the unemployment number will come down to the normal expected levels of 6/7%.

Financially, it's clear that the majority of graduates will see the benefits from their degree, as the extra £10k you see per year in salary from being a postgraduate outweighs the £40-50k debt you are initially saddled with.

In essence, as you get older, it’s more likely you’ll see your higher education as ‘worth it’.

References

1) Survey based upon 500 UK adults aged 21-35 who have a degree which they paid for and who are currently employed, conducted by OnePoll on behalf of Aaron Wallis Sales Recruitment

2) Based upon a typical three-year course with fees of £9,250 a year and a £6,378 a year maintenance loan

3) Office For National Statistics - Graduates’ labour market outcomes during the coronavirus (COVID-19) pandemic: occupational switches and skill mismatch, March 2021

4) Professional employment in the OFS report can be seen as a ‘highly skilled job’, matching SOC job codes where the role is either technically competent or at a managerial level

5) Office For Students - Projected completion and employment from entrant data (Proceed): Updated methodology and results, May 2021

 6) Department For Education - Graduates continue to benefit with higher earnings, April 2019 

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