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Last Updated: Saturday, 17 February 2007, 00:15 GMT
What price a university degree?
By Mike Baker
Education correspondent, BBC News

Mike Baker
"A complete vindication" of the government's policy to introduce top-up fees - that was how the prime minister greeted this week's news that university applications are on the way up again.

I suspect there were some big sighs of relief too after all the controversy and pain that surrounded the introduction of variable fees in England and Northern Ireland.

We now have hard evidence that young people are not, after all, turning their backs on university. They still think it is worth getting a degree. Are they right?

The figures from the Universities and Colleges Admissions Service (Ucas) show that applications across the UK are up by 6.4% this year.

Setting aside last year's drop as a blip, the long-term trend remains steadily upwards.

However much they may complain about higher fees, students are voting with their feet, suggesting they still regard a degree as a worthwhile investment of their time and money.

Yet, a closer look at the evidence suggests a more complex picture.

Fewer men

Top-up fees may not have halted university expansion but they are changing the whole university experience.

For a start, they seem to be accentuating the gender gap. This has been growing ever since fees started in 1998 and this year it widened again: with over 44,000 more female applicants than males.

Are men more reluctant to take on debt? Do they find it harder to take the long-term view?

This trend may be linked to another change: the shift in universities' role from providing a liberal, intellectual education towards a preparation for specific careers, especially in the public sector.

Thus much of the growth has come in teacher training, social work, and health-related subjects, all of which are particularly popular with women.

The second unusual pattern to emerge is the variation across the UK.

In England, the increase in applicants aged 20 or under was 7.2%. Elsewhere applications from this age group fell: Scotland (-1%), Wales (-0.6%) and Northern Ireland (-1.9%).

This is difficult to explain since top-fees exist in both England and Northern Ireland. However it may be partly explained by the fact that the two main universities in Northern Ireland both set their fees at the maximum of 3,000.

Good returns

There was some sign of price sensitivity amongst potential students in Wales. If they choose Welsh universities they will pay just 1,200 but if they opt for an English university they must pay the 3,000 charged by most institutions.

So perhaps that is why applications by Welsh students to English universities fell by 0.6% while there was a 0.4% rise in those applying to stay in Wales.

The third, and clearest, pattern is the trend towards courses that seem most likely to offer a good financial return.

So, for example, applications to courses in "tourism, transport and travel" were up by 30%. Courses involving some combination with business and administrative studies shot up by 25%.

Others showing a bigger than average increase included: veterinary medicine (22.4%), building (16%), marketing (14%), social work (14%), civil engineering (13%), economics (12.8%), and management studies (11%).

By contrast, some of the more purely academic courses showed smaller than average increases: classics (1.4%), history (1.8%), and geography (3.1%).

A few even showed a decline: archaeology (-10.7%) and American studies (-9.6%). The latter, bizarrely, may have something to do with anti-American sentiment.

Of course, there were a few exceptions to this trend. English studies, for example, saw a 7.9% rise.

Overall though it looks as if students are increasingly opting for courses which prepare them for a particular career or will furnish them with economically useful skills.

This is, of course, quite understandable. Things are getting tough for the younger generation.

They face higher levels of debt on graduation and, judging by the latest evidence, declining financial rewards in return for their extended education.

Salaries

The latest data on graduate employment is both good news and bad news for students.

The positive aspect is that graduate-level vacancies in 2007 are expected to increase by 15% over last year.

The negative is that this is not matched by a similar rise in graduate salaries. According to the Association of Graduate Recruiters - which represents the bigger recruiters - the median graduate starting salary is predicted to increase by just 2.1% to 23,431.

This is not only below inflation but also the smallest predicted salary increase for six years.

Indeed there are other signs that the graduate earnings premium, while still worthwhile, is diminishing.

At the time of the introduction of "top up fees", the government referred to research suggesting that graduates would, over a lifetime, earn some 400,000 more than non-graduates.

Yet last week, a report from Universities UK (UUK) put the graduate premium, compared to those with just A-levels, at a more modest 160,000.

That is not so big a gain when spread over a 40-year working career.

However, I should add that the report disputed claims that the graduate premium has diminished and the 400,000 figure was based on different assumptions.

Tougher times

What is clear beyond dispute, though, is the difference in the earnings premium of different subjects.

For graduates in medicine or dentistry, the lifetime advantage is 340,000 compared with an average of 34,949 for arts graduates.

So how good or bad do things seem for future students and graduates?

A recent paper from the think tank Reform dubbed the under-35s the "Ipod generation": Insecure, pressured, over-taxed and debt-ridden.

It described them as a "crossover generation" who will pay the cost of the welfare state without receiving many of its benefits.

It predicts a future in which young graduates are not only paying taxes to support a greying population but are also required to pay into their own private pensions whilst still paying back their student loan debts and struggling to get onto the increasingly over-priced housing market.

There is a grim reality about this. This generation certainly has it tougher than its predecessors who received a free university education. But is it really an argument for not going to university?

I think not. All the predictions about future labour market demands indicate that while the number of unskilled jobs will shrink in future, the number of graduate-level jobs will grow.

Future graduates may face a less rosy future than those who left university 20 or 30 years ago, but they still have better prospects than their peers who go straight into work from school.




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