Student debt cancels out higher graduate wages 'carrot' - report


Student debt payments wipe out the benefit of higher earnings for most graduates, according to a new report.

Campaigners behind the report say the "carrot of higher graduate earnings" should not be used to justify increased fees.

Politicians who use higher earnings to argue for higher fees should be "challenged for gross mis-selling", they say.

The report by the Intergenerational Foundation focuses on tuition fees in England which are capped at £9,000 and paid back in instalments once graduates reach a salary threshold.

It claims that an estimated £100,000 lifetime graduate earnings premium is often used by politicians to justify increasing fees for university courses, changing the terms and conditions, or increasing interest rates.

But the report claims that apart from Oxbridge, medical and dentistry graduates, there is no guaranteed graduate earnings premium for the many young people entering higher education.

Instead it says even that even if a student does achieve a lifetime premium of £100,000, spread over 45 years it amounts to £2,222, before Income Tax and National Insurance, which it says is "simply not enough to cover the interest accruing on the average loan".

Angus Hanton, co-founder of the Intergenerational Foundation, said: "Any politician that dangles the carrot of a graduate premium on future earnings to justify increases in student fees, interest rates on loans, or adjusting student loan repayment thresholds, should be challenged for gross mis-selling."

The Department for Business, Energy & Industrial Strategy said that independent data shows having a degree continues to give graduates "a big earnings boost".

A spokeswoman said: "According to our most recent research this amounts to average returns of around £170,000 for men and £250,000 for women over a working life, taking into account the impact of loan repayments, national insurance and income tax payments.

"We want all graduates to get the most out of their studies and understand that their experiences and earnings do vary. That is why we are reforming the system and introducing a Teaching Excellence Framework to focus on graduate outcomes and feedback, ensuring universities are delivering the skills students and employers need."