Decades of “university for all” rhetoric is hurting students whose degrees no longer pay off, and taxpayers who are stumping up the cost, writes John O’Connell
As A-Level results land this week, hundreds of thousands of teenagers will be weighing the next step in their lives. For decades, students have been pushed a comfortable fiction: go to university, earn more, live better. It has been the default advice of parents, teachers and ministers alike, and for a time it was broadly true. But the world has shifted. The graduate premium is fading, job markets are crowded, and not every degree now leads to a more prosperous life.
As campaigner Paul Wiltshire has discovered, the brutal truth is becoming clear: around 160,000 of last year’s 495,000 university intake will earn the same as, or less than, non-graduates. Among younger graduates aged 21–30, the average premium over non-graduates has fallen from 35 per cent in 2007 to just 21 per cent today. Across the working-age population it has dropped from 50 per cent to 36 per cent.
Too many graduates have flooded the market
The basic economics are straightforward. In the 1950s, only about three per cent of young people went to university. Today, the figure is around 50 per cent. That surge has vastly increased the supply of graduates, while the number of jobs genuinely requiring degree-level skills has not kept pace. Inevitably, returns have been squeezed.
The Taxpayers’ Alliance has been highlighting this problem for years. Back in 2007, we identified 401 “non-courses” – degrees of dubious academic merit, costing taxpayers over £40m annually. Even then, with participation rates far lower than today’s 50 per cent, we warned that government targets to increase university attendance were creating a bubble. The University of Derby alone offered 41 such courses, while institutions across Britain were luring students into subjects that raised expectations while delivering limited employment prospects.
Of those who went to university in the mid-2000s, roughly one in five will earn less over their lifetime, after tax and loan repayments, than if they’d skipped university altogether. In some subjects, the financial return is close to zero or negative.
Yet Universities UK, an industry group which represents universities, wants participation pushed ever higher, to 70 per cent by 2040. That would flood the market further, while diverting young people from other, potentially more rewarding, routes.
University no longer pays off
A functioning market would adjust to falling returns: fewer people would choose university, more would seek vocational training or apprenticeships. But easy access to government-backed loans and decades of “university for all” rhetoric have dulled those signals. Many school-leavers apply not because it is the best option for them, but because it has been presented as the only option worth considering.
Even the Institute for Fiscal Studies’ widely-cited figures – £130,000 extra lifetime earnings for men, £100,000 for women – are based on graduates from the mid-2000s when participation was around 30 per cent, not today’s 50 per cent. These also use mean rather than median averages, with the actual median around £70,000.
Meanwhile, the costs are significant. Taxpayers shoulder course subsidies and inevitable loan write-offs when graduates cannot repay. Only 56 per cent of full time graduates starting in 2024-25 are expected to repay their loans in full. Students who might have thrived by starting work at 18 instead spend three years accumulating debt for a qualification that employers may treat merely as a screening device, rather than evidence of specialist skill.
Only about 19 per cent of graduate job advertisements now specify a degree subject as an actual requirement. When employers don’t care what degree you have, what exactly are students paying for?
The current system represents a significant policy failure: it distorts the labour market, wastes taxpayers’ money, and leaves young people worse off. For many school-leavers, starting work at 18 with on-the-job training would deliver better career outcomes than three years accumulating debt for credentials that lack market value.
John O’Connell is chief executive of the Taypayers’ Alliance