Is it still worth going to university? Earning power of a degree falls 22% in a decade ?

educational reporter,London(weastar times/mail):::The higher salary that graduates traditionally gain from having a university degree has been slashed by a fifth during the past decade.

A study has found that the rise in numbers attending university and increased competition for jobs has drastically driven down the earning power enjoyed by previous generations of graduates.

Researchers from Warwick University followed 17,000 students from 2006 to their graduation into one of the worst recessions in history, and compared it to graduates who finished their studies in 1999.

The recent graduates are, on average, earning 22 per cent less than those who started at university a decade earlier. 

They are also struggling to find jobs that justify the debts they have built up in getting their degrees, with four in ten failing to get work that requires their qualifications, while one in ten have spent at least six months on the dole.

The researchers concluded that a degree continues to deliver a 'significant earnings advantage', although the size of it varies widely according to the subject studied.

Medicine and law graduates suffer the least, losing about 16 per cent and 9 per cent respectively, while arts graduates saw the sharpest slump in earning power, losing 32.9 per cent.

Isabelle Dann, 22, who graduated  from the University of Manchester this summer with a 2:1 in English literature, has ended up working in a pub near her family home in Highgate, North London.

 

'I get less and less hopeful as the days go on,' she said. 'The problem is that there are a lot of people who already had good jobs but have been made redundant and are looking below their skill level. Graduates are competing with these people.'

Students who began their studies in 2006 were the first to pay tuition fees of £3,000-a-year and emerged from university owing a record amount. Almost half reported debts of £20,000 or more.

Despite this, the researchers found that 96 per cent of graduates would do a degree again if they had the chance.

They also concluded that a degree continues to deliver a 'significant earnings advantage', although the size of it varies widely according to the subject studied.

While medicine and dentistry graduates were earning on average £32,447, those who studied the creative arts and design were bringing in just £18,514.

While the average decline in earnings since 2003 was estimated at 21.9 per cent - about two per cent a year - the slump for arts graduates was 32.9 per cent.

For medicine and related subjects, it was 16 per cent. Law held up particularly well, with graduates in this subject seeing an earnings decline of just nine per cent.

With a further hike in tuition fees to a maximum of £9,000-a-year, the study concludes that the boom in the numbers going to university seen in recent decades is over.

It claims the number of graduates will now plateau at 250,000 per year.

The 'Futuretrack' research, conducted by Warwick University with funding from the Higher Education Careers Services Unit, followed 17,000 students from the time they applied for courses in 2006 to their graduation into one of the worst recessions in history and experiences on the job market.

The researchers had previously carried out research among graduates who finished their studies in 1999.

'Compared with the experiences of graduates some ten years earlier, Futuretrack graduates faced a tough labour market,' the report said.

'The greater number of graduates seeking employment, coupled with harsh economic conditions, have combined to create higher levels of graduate unemployment, a higher proportion of graduates in non-graduate employment and a lower rate of progression for graduates than was the situation ten years earlier.'

The Government has claimed that a degree can add more than £200,000 to a male graduate's salary over a lifetime compared with those who decided against university.

But the research found the claim 'does not reflect the evidence revealed here'.

It said the 'relative earnings advantage associated with a degree appears to have been declining slowly over the past decade, possibly by as much as two per cent per annum relative to average earnings in the economy'.

The report went on to warn that the decline in the earnings premium was not simply due to the recession, and was unlikely to bounce back up as the economy improves.

In further findings, students who got involved in teams, societies and clubs at university were more likely to have landed good jobs. The researchers found that employers are increasingly looking at extra-curricular activities when seeking to differentiate between a field brandishing mainly 2.1s.

Graduates with first-class degrees and those who attended high-ranking universities were also better off.

One of the most 'disturbing' findings, the researchers, said was that the pay gap between men and women was showing no sign of narrowing. Men earn about £2,000 more per year on average.