The True Cost of a College Education
ANUSHKA ASTHANA / The Observer (UK) 23apr2006
Graduates will have to work well into their thirties before they can reap the financial benefits of getting a degree, according to new research that will make many parents and teenagers question the value of university. The spiralling costs of university education in England and Wales mean that it is only when graduates with a three-year degree turn 33 — after 12 years of full-time work — that their earnings overtake those of someone who began work at 18. Five years ago, graduates reached that break-even point at 28.
This dramatic change is likely to make more and more A-level students ask about alternatives to university, said the author of the research, Peter Brown, director of Gabbitas Educational Consultants, which advises parents on their children's schooling. 'We believe an increasing number of A-level students who might previously have considered the classic three-year degree course will in fact go to work at 18.'
But if two-year degrees, such as those proposed by the government, were on offer, they could be extremely tempting, Brown added. The study, which takes account of university costs such as fees and accommodation, shows that people studying for two years would see the financial benefits when they reached 29.
The biggest losers now are the large number of students who drop out of university after two years. By the time they reach 33 they will have earned £60,000 less than if they had never bothered going to college in the first place.
But critics were quick to defend the benefits of studying. Julian Nicholds, vice president of the National Union of Students, said: 'Going to university is about more than earning money. It is about getting involved in student life — getting involved in political and democratic bodies, setting up or joining a society and meeting lots of people.'
A graduate can still expect to earn more over their lifetime than someone without a degree, according to the government. 'Graduates go on to earn a very substantial earnings premium,' said Bill Rammell, the higher education minister. 'Over their working life, the average graduate will earn over £100,000 more than someone who just had A-levels. What's more, research by the Organisation for Economic Co-operation and Development indicates this return is among the highest internationally.'
Brown, who also chairs Independent Remuneration Solutions, a consultancy on directors' pay, said a degree helped after the age of 33, as top firms wanted graduates in high positions, but said this was changing in more companies.
The research was issued as the director of admissions at Cambridge University admitted that students from abroad were turning down places there to go to less prestigious US universities with larger support packages. Geoff Parks said: 'The market has become more and more competitive and an increasing number of those we make offers to outside the EU decline them. We are losing some to the US universities, but now we are seeing Chinese universities [are also] more financially attractive.'
source: http://observer.guardian.co.uk/uk_news/story/0,,1759544,00.html 23apr2006