Tens of thousands of university graduates are earning less than the national living wage five years after finishing their degree, shocking new data shows.
A new report from Policy Exchange on the UK’s higher education sector found that more than a quarter of people graduating with degrees including sociology, creative arts and design, and performing arts, earned less than the national living wage – £12.71 per hour for those aged over 21 – after five years.
Policy Exchange is urging reforms within a system it says is at a “breaking point”. It said the UK’s decade-long fee-freeze, alongside high inflation, pension pressures and fewer international students, had created a “perfect storm of a funding crisis”.
Shadow education secretary Laura Trott said: “The report exposes just how unfair and demoralising the current system has become.
“Many graduates do exactly what they were told would secure a better future, only to find themselves burdened with debts for qualifications that do not provide the opportunities they were promised.”
The report found that in 15 of the 34 broad subject classifications, which include some of the largest subjects like sociology, creative arts and design and performing arts, more than a quarter of graduates earned less than the national living wage after 5 years.
In 27 of 34 subjects, median graduate earnings after five years were less than £39,039 – the national median earnings for full-time employees.
According to the report, only 57 per cent of graduates are in full-time work 15 months after graduation, while a third of graduates were not in graduate jobs, and at least 30 per cent of degrees offered no net economic return, when measured for both the individual and the taxpayer.
Among several recommendations, the think tank has called for higher academic standards and a 30 per cent reduction in the number of people going to university.
It is also urging the government to introduce a fees freeze for five years and abolish real interest rates on Plan 2 student loans, which will be capped at 6 per cent from September.
The maximum tuition fee for British university students is capped at £9,790 a year for standard full-time courses, and the average student will leave university owing £53,000.
Labour announced it was capping interest rates for Plan 2 and Plan 3 borrowers in April following significant pressure over the cost of repayments.
The government has faced widespread criticism for the student loan system and has been urged to bring down interest rates to prevent graduates from being left with mounting debt.
The findings come two weeks after a report found that the number of young people not in work or education reached more than 1 million for the first time since 2013.
A government spokesperson said: “We’re cracking down on poor quality courses so that students can be confident they’re getting value for money from university degrees, while making the system fairer by reintroducing targeted maintenance grants and capping interest rates on student loans.
“The problems we inherited are deep rooted and it’s why we’re bringing forward the biggest youth employment reforms in a generation. This includes £2.5 billion of funding, more apprenticeships, and business grants.
“Early intervention is also key – we’re helping school children future proof their careers with new top quality vocational routes and better careers advice.”
