Graduate Pay Premium

[muon]

The average graduate pay premium is now declining as more recent data comes out.

http://www.bbc.co.uk/news/education-36916009

The IF Lobby have now put it at only £100k over a lifetime and that is before taxes.

The latest government figures are now only £170k for males and £250k for females. Previously used number was £400k.

What you then have to remember is that is an average. It includes high flyers from top universities and top courses. The numbers used to justify tuition fee increases are now falling down. The government is failing to recover the initial outlay (even the worst universities are charging £9k a year) and some graduates are stuck paying 9% higher tax, although those that pay this consistently are likely benefiting from their degree.

Tuition fee increases should always have been limited to those courses which could show they were value for money for students.

A couple of explanations for the above.

1. Not enough graduate jobs to go round. So fewer people achieve the headline graduate salary numbers.

2. Graduate starting salaries have stagnated on average.

http://www.thecompleteuniversitygui...rofessional-premium/graduate-starting-salary/

They have actually grown slower than non-graduate salaries resulting in a closing of the gap.

http://www.thecompleteuniversitygui...-salary-advantage-–-the-professional-premium/

 

[muon]

Not saying people shouldn't go to university or the government should make loans less accessible, but the government should do more to stop getting ripped off by universities who know their fees are ultimately bankrolled by government.

http://www.independent.co.uk/studen...ing-leaked-government-memo-says-a6991121.html

 

[muon]

I am firmly of the belief higher education is a signalling exercise (other than obvious vocational degrees). I don't think it adds much human capital, it simply allows employers to better rank applicants. That means there needs to be a genuine scale of tuition fees commensurate with the strength of signal it gives (only better universities should be able to charge more, because their students will earn more). It also means the aggregate returns to education are relatively low as the benefit is only that of frictions which exist due to asymmetric information.

http://economics.mit.edu/files/7186

I was one of the first years to pay tuition fees (many, many years ago now). As an economics graduate applying for a related role, my first interview question was whether I thought tuition fees were justified. It's an interesting time to reassess things.

 

[Zethor]

Sleepless night uh?

 

[Destination]

Same concept, we are treading water while everyone else is streaming ahead, it is a sign of stagnation within society.
Without innovation we cannot strive forward.

 

[dowie]

Tuition fee increases should always have been limited to those courses which could show they were value for money for students.

What? So the government ends up giving bigger subsidy to courses that offer less value (in a financial sense). Including plenty of poorly run courses at low end universities. Frankly that wouldn't make much sense, I'd rather they did the opposite. I guess under the current system that eventually a fair few courses will become unfeasible if students become wiser to the idea that some degrees aren't going to be worth much.

 

[dowie]

I am firmly of the belief higher education is a signalling exercise (other than obvious vocational degrees). I don't think it adds much human capital, it simply allows employers to better rank applicants.

Maybe in some roles, like generic 'grad schemes'. If they're open to any graduate then the work doesn't really require a graduate in the first place and they are pretty much doing as you say, using the degree as a signal... minimum 2:1 etc... so can work hard, achieve goals etcetc... I was on one of those schemes but we also had a couple of people who weren't grads but had worked at the company for a couple of years in junior roles, (including one guy from NYC who's been noted by a director for being one of the last to leave the office every day - he'd been doing extra work for developers etc.. in addition to his admin role).

On the other hand some jobs do have requirements and not just the obvious vocational ones as you've highlighted. Some roles might require quantitative skills so open to maths, physics etc.. grads. Perhaps some so called 'creative' roles might also be aimed more at certain grads with an arts background.

 

[Amp34]

Same concept, we are treading water while everyone else is streaming ahead, it is a sign of stagnation within society.
Without innovation we cannot strive forward.

You could also argue that, ignoring the top 1% for a moment*, the world is becoming more equal, with the poorer majority catching up with the richer minority (us, the people living in high income countries). That seems a good thing to me, equality and all that. As long as we aren't going backwards then whats the issue?

*The top 1% are in their own little world unfortunately.

 

[delta0]

You are in the top 1% in the world if you earn the average salary in the UK. Obviously purchasing power is different. This probably still hides the fact that many of the countries in the middle of the list are still very low pay. "Asia" is a very broad term. Japan, Korea, Singapore, Hong Kong etc. Are going to be in the top percentile with US and UK etc.

 

[Tefal]

Tuition fee increases should always have been limited to those courses which could show they were value for money for students.

l]

Wut?

Why should students who chose a sensible degree that improved thier earning potential pay more.

While the student who picked a doss subject and just mooched about for 3 years not pay more?

 

[flowrider99]

My daughter got a 2:1 Education degree last year but no one will employ her without experience so she works for less than minimum wage in a children's nursery. She recently applied for a job with our local education authority for a trainee position requiring A levels and didn't even get an interview. For her university has been an expensive mistake.

 

[Hades]

I left school in 1987 and chose not to go to university even though I could have. I wanted to get to work. It has never held me back and I managed to get into the work place several years ahead of the 1990's recession. My friends came out of uni into that recession and were unemployed for years. That was when there were no uni fees and blue chip companies didn't always need you to have a degree. Once I had that first job under my belt I had enough experience such that a degree was irrelevant. If I applied for a job my experience seemed to count more that someone not experienced but with a degree.

I do regret not going to uni for the experience only. But I don't regret it for the education.

My children will have to pay fees and I honestly feel they may be better financially long term not to go to uni. However it's too much of a risk because nowadays a degree seems to be a piece of paper you need to get you CV looked at by an employer for even the most basic job. What appears to have happened is that a degree has been devalued so everyone is expected to have one. Top employers now differentiate by looking at which uni you went to instead.

It may be better for my children if I remortgaged my house for them, gave them the equivalent fees they would have to pay over their uni lifelime, allowed them to pay me back over their lifetime, and used it for a deposit for a property for them.

 

[Buffman]

.

It may be better for my children if I remortgaged my house for them, gave them the equivalent fees they would have to pay over their uni lifelime, allowed them to pay me back over their lifetime, and used it for a deposit for a property for them.

A pretty risky strategy! At least you only pay fees on 9% of your earnings over 21k. (so if your kids don't get jobs etc you're not financially crippled)

I think uni fees are mad at 9k... Even 2 to 3k seems like a lot. Luckily I went to Scotland (and did 5 years master degree in engineering fee free) however I think Scotland should also at least cost something...

 

[Hades]

A pretty risky strategy! At least you only pay fees on 9% of your earnings over 21k. (so if your kids don't get jobs etc you're not financially crippled)

I think uni fees are mad at 9k... Even 2 to 3k seems like a lot. Luckily I went to Scotland (and did 5 years master degree in engineering fee free) however I think Scotland should also at least cost something...

Yes I doubt I would do it. As you say it's a pretty risky strategy. It would also need their involvment. They will be adults at that point so the decision would be theirs rather than mine.

 

[Destination]

The current system of fee and repaying is not sustainable and will leave a very large hole later along the line.
They should have a system that works for both universities and graduates.
This hole in the system through eventual non-repayment is farcical.
Leaving people with massive debts that many will never repay and will be written off.

 

[Zethor]

My daughter got a 2:1 Education degree last year but no one will employ her without experience so she works for less than minimum wage in a children's nursery. She recently applied for a job with our local education authority for a trainee position requiring A levels and didn't even get an interview. For her university has been an expensive mistake.

You voted for Brexit, right? Do you think that will help your daughter in the long term?

 

[malachi]

My daughter got a 2:1 Education degree last year but no one will employ her without experience so she works for less than minimum wage in a children's nursery. She recently applied for a job with our local education authority for a trainee position requiring A levels and didn't even get an interview. For her university has been an expensive mistake.

Its horrible isn't it? Hades is right, a degree has been devalued to a point where you get the term "mickey mouse degree" that wasn't the case over 20 years ago. If you had any degree back then you was good to go for a good job.

Maybe the UK education system is to blame, telling everyone if you have a degree then you get a well paid job straight away. When really it seems it was all just to make our Government more money with the high tuition fees.

I'm 32 and don't have a degree, I didn't even think about going to uni when I left college. I went straight into full time work. It wasn't the best paid but now I have good job (yes in IT ) but it pays way more than the UK average salary, I am guaranteed a pay rise every year. Pays for my mortgage, car, not a flashy car but it gets me from A to B, new toys, holidays aboard every few months and savings for a rainy day.

Apart from my mortgage, I have no debts so I can financially do whatever I want. Unlike my friends and some of the people I work with who have degrees but they have fallen into the trap of thinking having a degree would get them a will paid job. Now they are still on minimum wage or just above it. Doing the same job they could without a degree. Worse of all, they are upto their eye balls in debt or need their parents to lend the money.

At the sametime its down to the motivation of the individual, they got the degree, took whatever job they could, got comfortable and stayed there for years without putting their degree which they worked hard for to any use. Which is a shame

 

[muon]

Wut?

Why should students who chose a sensible degree that improved thier earning potential pay more.

While the student who picked a doss subject and just mooched about for 3 years not pay more?

This is about universities which offer value getting closer the money they can get in a competitive environment. This prevents raising the waterline so high that rubbish courses are being funded to the same degree as good courses. These courses have no reason to improve or provide value to a student and ultimately the government.

Blindly funding courses not even worth close to worth 9k is unsustainable. Some accountability needs to be instroduced without resorting to a completely free market model for higher education.

As for students ending up paying more for certain courses, that is right as the return on that investment is higher. This is the whole argument for tuition fees in the first place, however it hasn't properly taken into account the distribution of standards.

Sleepless night uh?

Way too warm, yeh

 

[johnloo]

Same concept, we are treading water while everyone else is streaming ahead, it is a sign of stagnation within society.
Without innovation we cannot strive forward.

One the east catches up with the wast to a state of equilibrium, west pay will never rise as fast as eastern pay, welcome to globalisation. the ticket that makes the western workers poor.

 

[muon]

What? So the government ends up giving bigger subsidy to courses that offer less value (in a financial sense). Including plenty of poorly run courses at low end universities. Frankly that wouldn't make much sense, I'd rather they did the opposite. I guess under the current system that eventually a fair few courses will become unfeasible if students become wiser to the idea that some degrees aren't going to be worth much.

You have my post the wrong way round. Bad courses should get less funding overall per student.

Under the current system, the estimates students are being given are at an aggregate level numbers which are misleading. Students find it very difficult to know how much earning potential rises with most courses, (it is only obvious in some cases). Even statisticians with a lot of data come up with conflicting information.

The very fair funding mechanism means that it is the government loses out whilst some higher earning students at some of the worse institutions are paying 9% of income for little realised returns.