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UK students benefit financially despite university fee hike

A counter-intuitive report produced by PricewaterhouseCoopers and commissioned by Universities UK indicates that the latest cohort of UK university students are ultimately better off financially despite the new £3000 a year tuition fees. One factor in this change is that under the new student finance system, new fees do not have to be paid upfront (as was the case before 2006 in England) and can be prolonged until the graduate is earning. At the same time, the variety of grants, bursaries and interest free loans available have increased, improving the immediate financial package of the student. Ultimately, the nominal gain in the present exceeds the economic cost incurred in future repayments. Further, the state also benefits from accruing taxes on prolonged loan repayments

The study also reports on several other economic trends and benefits in UK university education, namely:

  • students with undergraduates qualifications will earn 20-25% more over a life time than those without;
  • the returns to higher education qualifications have remained relatively stable over recent decades of expansion of higher education – that is to say, qualifications remain valuable despite the increase in graduates in the work force;
  • there is a wide variation in the gross additional lifetime earnings of graduates of different degree subjects, ranging from £340 000 in medicine to £34 000 for the arts;
  • the average rate of return on an undergraduate degree prior to the introduction of the variable fees was 12.1% per annum whereas the current rate of return to higher fee payers is estimated at 13.2%;
  • the average gross additional lifetime earnings for a postgraduate degree are approximately £70 000 – £80 000.

Research report