Rishi Sunak, one of the candidates for the post of Britain’s next prime minister, has promised to “crack down” on university degrees with poor career results. This is not a new idea. The regulator of universities in England, the Office for Students, has already proposed setting minimum thresholds for the proportion of graduates from each degree who should work in what it considers highly skilled jobs.
A degree that does not meet the regulator’s expectations would be barred from hiring publicly funded students. As a threshold value, the Registrar’s Office proposes that 60% of graduates of their first full-time degree should work in highly qualified professions within 18 months of completing their degree. For full-time Master’s students, the proposed percentage is 70%. Final values will be confirmed in September.
Of course, students do not only go to university for their career prospects. They are motivated by their interest in their subject and by the social, cultural and sporting opportunities at the university. You are looking for personal growth that comes from meeting new people in a different place.
In addition, college graduates switch between jobs or even careers more often than their parents. In this context, the government’s focus on graduate employment may seem odd or short-sighted.
The reason for this focus is the funding of English higher education and how much it is now costing the government. In 2012, the government tripled tuition fees to up to £9,000 per year. This was made possible by converting university grants into government student loans. These are currently payable by graduates as a proportion of their salary above an income limit and are then amortized if not fully repaid after 30 years.
Alongside this, the government encouraged competition with promises that universities would be more responsive to students than consumers. It eliminated hiring controls, brought new universities into the system, and set up a market regulator – the Bureau for Students.
The cost of education
In this more competitive system, it was expected that students would only be willing to pay higher fees for courses that result in higher earnings. The more these students earned as graduates, the more likely they would be to pay off their student loans in full.
Other courses would have to charge lower fees or students would choose not to go to university at all. The system would manage demand for higher education and maximize loan repayments while controlling costs to the government.
However, despite government expectations, since 2012 most universities have charged the highest fees for most disciplines, recognizing that lower fees could be a sign of poor quality and discourage students. Most young people have not been deterred by higher fees, even for lower-earning programs. Because they wanted to go to university for reasons that go beyond their professional perspectives.
In 2012, the government didn’t have to book loan write-offs in its accounts until they happened, so it was an issue to defer to its successors. However, in 2018, the Office for National Statistics ruled that the proportion of loans likely to be written off should be immediately counted against the balance of government spending on higher education.
By 2020, the government expected to write off more than 50% of the value of student loans, compared with about 30% when fees were increased in 2012. Before the 2012 reforms, the annual cost of university participation to the government was £7bn and the change in funding was expected to save £3bn. Instead, the annual cost soared to £10billion in 2020.
Employment thresholds for college graduates are intended to counteract these rising costs, among other measures proposed by the government to change loan conditions. They cut off funding for courses that are less likely to repay loans.
This focus on graduate outcomes has raised concerns that future regulations will result in the closure of degree programs, particularly in the humanities.
However, it is more likely that these closures are due to competition. The latest data shows that undergraduate humanities applications in England fell by 5% between 2019 and 2022, compared to a 15% increase in applications overall.
Humanities majors are more financially viable than many other majors because of their lower fixed costs and smaller footprint, and are easier for more popular universities to expand. This means that others are losing students quickly and are no longer sustainable.
Global experience suggests that the interests and aspirations of young people and their families are driving the expansion of higher education. Every August when students in England receive their exam results, ministers are more concerned with securing them places than with controlling the system. This is because limiting higher education is an unpopular constraint on ambition. It is student demand that is shaping higher education and regulation is unlikely to change that.