HE participation above 30 per cent ‘squeezes graduate premium’

Data recording the UK’s graduate premium is “blunt” and “potentially misleading” and needs to be broken down to show whether “marginal” students are benefiting financially from their degrees, a new report argues.

Falls in the average earnings graduates receive compared with their peers without degrees are mostly attributable to those with lower prior academic attainment receiving next to no wage bump, according to the paper from campaign group University Watch, which has been reviewed by a Royal Statistical Society data ambassador.

Author Paul Wiltshire, a semi-retired accountant and father of four students who began his campaign because of concerns about online teaching during the Covid pandemic, explored various models to explain why the graduate premium, as recorded by the annual Labour Force Survey, fell between 2007 and 2023.

Long-term trend data shows a decline from 50 to 36 per cent for 16- to 64-year-olds and from 35 to 21 per cent for 21- to 30-year-olds.

Wiltshire concluded that the most plausible reason was that graduates with strong academic backgrounds – the sort of people who would always have gone to university – have seen pay dip slightly as more graduates entered the workforce.

Those who have become more likely to go to university as higher education became massified in the past 20 years have seen a much more considerable drop in their graduate premium, he estimates.

This means that many graduates started to see little financial benefit from their degrees when the UK’s higher education participation level passed 30 per cent, he concludes. It is now roughly 50 per cent.

The report argues that to test this hypothesis, more data is needed that would allow a comparison between graduates and non-graduates of similar levels of prior academic achievement, for example those who received three Cs at A level.

“What we need is actual data, rather than the overall average, to break down the graduate premium,” said Wiltshire.

“When you are increasing participation levels, what you are specifically doing is bringing in more and more people with lower prior academic attainment, so it is critical to know how they are performing in terms of was it really worth them getting into that level of debt.

“What I want is our young adults to not be exploited by the HE sector and mis-sold a product – a university degree – on a false promise that it will be guaranteed to launch their career of choice and get them higher career pay.”

Harry Snart, a data scientist and Royal Statistical Society ambassador, writes in the report that as the average graduate premium “decreases it is likely that the proportion of graduates achieving very low, or negative, graduate premiums will increase”.

“Given the lack of publicly available data, it is not possible to quantify this directly with certainty. The scenario-based analysis in Paul’s report reasonably illustrates how the decline in marginal graduate premiums might look given the assumptions that he makes.”

Snart echoes the report’s call for “improved reporting and availability of graduate pay premium data” because it “would provide better clarity for prospective students and be less prone to misinterpretation and misrepresentation”.

Wiltshire said most attempts to measure the graduate premium – and other benefits of university – also operate on the “flawed assumption that all your future career outcomes are to do with the fact that you are a graduate”.

“It is as if a degree is the absolute causation of everything,” he added. “That is fundamentally wrong. We need the data to be cleverer than that. We need to know what jobs these people are doing and is it in anyway connected to the degree that they did.”

tom.williams@timeshighereducation.com