This is obviously a complex and personal question: if you went to university you might feel that the experiences you had there and the friends you made (not to mention the job opportunities you’ve had as a consequence) are invaluable.
You might think that today’s young people face such financial strain if they attend university that they should consider other options, such as school leaver programmes or apprenticeships.
You might think that education up to the age of 18 is enough and that the main priority should be gainful employment.
Whatever position you come from, we have listed the “pros” and “cons” of modern university study, so you can help the young adult in your life come to an informed decision.
University: the “Cons”
Most full-time students need a tuition fee loan, which covers the full cost of the tuition fee. Depending on where and what is being studied, this total can vary, as can the maintenance loan available to all eligible UK-domiciled students, to help pay for living costs at university.
The tuition fee and maintenance loans are added together to give the total amount of debt. It's difficult to say the exact amount of debt individuals will graduate with, but a typical student on a three-year course outside of London will to graduate with around £35,000 - £40,000 of student loan. This loan accrues interest. In England for example this is 5.5%.
After graduation, yearly repayments are set at 9% of whatever is earned above £21,000, regardless of the total loan amount.
For example, if a graduate earns:
- Below £21,000: they won’t have to pay back anything
- £25,000 a year: they will repay £360 per year, £30 per month. This is the same however much was borrowed.
- £30,000 a year: they will repay £804 per year, £67 per month. Again, this is the same however much was borrowed.
After all this debt, graduates are not guaranteed employment at a higher level, in fact the Office of National Statistics found in 2013 that almost half of recent graduates in the UK are in non-graduate jobs.
University: the “Pros”
The latest Office of National Statistics report comparing graduates to non-graduates found that:
- Graduates were more likely to be employed than those who left education with qualifications of a lower standard
- Non-graduates aged 21-30 have consistently higher unemployment rates than all other groups
- Non-graduates aged 21-30 have much higher inactivity rates than recent graduates.
Research has shown that graduate starting salaries at the UK’s leading graduate employers is, on average, a whopping £29,000. A quarter of top graduate programmes will pay new recruits more than £35,000 when they start work and ten organisations are offering at least £40,000 to this year’s graduates. Obviously this isn’t the case for everyone, but these are positions only available to university graduates.
Student debt, even though it can be large, does not affect the borrower’s credit rating, as student loans are not included on credit reference files.
Any outstanding student debt is written off after 30 years, even if nothing has been paid back during that time (because the borrower wasn’t working or was earning below £21,000).
In fact, studies have estimated that over 70% of graduates won’t have paid their full loan back after 30 years.