Graduate starting wages down 11%; is it time to start reconsidering university?
Research compiled by the Complete University Guide has worryingly identified that starting wages for graduates has fallen sharply in the past 5 years, just days after another independent study forecasted that a large proportion of students could be paying their university loans back into their 50ís.
Last week, the Sutton Trust argued that changes made to the student loan repayment procedure back in 2012, coupled with the higher tuition fees that university graduates must pay back, has meant that it is likely that most will still be addressing their debt into their 50ís, with some having to write it off completely.
And the Complete University Guide has reinforced this notion, with their latest research indicating that the average starting wage for a graduate has fallen by a sizeable 11%, to £21,702, between 2007 and 2012.
The study, based on the usage of official data, illustrated that this downward trajectory has continued to occur since 2012, and could be falling at an even larger rate than two years ago.
In comparison, the average graduate wage only dropped by 4% in the five year period between 2005 and 2010, suggesting that the recession could have long lasting effects on the finances of a plethora of recent and current students.
The slide in starting salaries was also identified to have hit the previous leaders of the statistic, with the research highlighting that both Medicine and Dentistry starting wages had fallen by a monumental 15% and 9% respectively between 2007 and 2012.
However, the most compellingly aspect of the research was its analysis of the value of the graduate premium in the 5 year period to 2012, which is the difference between starting wages for graduates and non-graduates in a certain profession.
The fastest expanding graduate premium gap was identified by the research to be in the building industry, where an average graduate would have earned around £4,045 more than a non-graduate back in 2007, but would now earn a substantially higher £7,174 than their non-graduate counterparts, representing a rise of 77%.
ëBest route to a good jobí
The overall average for the graduate premium across all subjects actually decreased to £6,717 from £6,732, though this masks the reality that a number of subjects have seen a sharp narrowing in the premium, suggesting that many prospective university students will have to carefully consider whether going to university is financially beneficial in the long term.
However, the study also displayed a narrowing gap for the graduate premium in a multitude of different subjects, compelling the guideís principal author, Dr Bernard Kingston to argue that many people should consider whether university is truly worthwhile to pay for, or whether there is little merit to their future employment prospects.
Dr Kingston said: "These figures show a continuing decline in the graduate premium across many subjects, and must be a concern to students when choosing what to study at university when tuition fees of up to £9,000 a year in England and Wales.
"It is helpful for young people considering which subject to choose to see how their earning potential for the occupations for which they may qualify changes over a short time.
"While financial returns should not be the only consideration, they are becoming more important, whether we like it or not. However, with a volatile labour market, it is difficult to predict the future for any particular subject."
However, the government has defended the higher education system, highlighting that official data compiled over the past decade has clearly illustrated that most graduates stand to earn more over the course of their career than non-graduates, and arguing that it is the recent increase in demand from employers for graduates that compelled them to remove the cap on university students from 2015/2016.
A Department for Business, Innovation and Skills spokesman said: "A degree is still one of the best routes to a good job and a rewarding career. Typically those with a degree earn considerably more over their lifetime, an estimated £165,000 for men and £250,000 for women.
"The increased number of graduates has been met by increased demand from employers which is why last year the
chancellor made an historic commitment to remove the cap on the number of people who could go to university by 2015-16."
The reality is that students must accept that if they wish to go to university today, then they will have to acquire a far larger amount of debt than their predecessors. Considering that the graduate premium gap widely ranges between different subjects, it would be highly beneficial to analyse the current level it is at on your desired subject, in order to ascertain whether your earning potential from your course is worth the larger amounts of money that you will have to pay back.
If the prognosis for the merits of your course is positive, then going to university, acquiring the qualifications and embarking on the journey to your planned higher salary is a sensible and careful plan of action that will prevent you from having to wait years to afford paying back your student loan.
Conversely, if your desired course has little affect on your future employment prospects, then it may be worth considering an apprenticeship or an early entry in work, as this could save you a wealth of money in the long term and could even put you in a position that is ahead of your graduate counterparts when they come out of university at least years later.