The returns to higher education
69. HEFCE has noted that "the costs and
potential benefits are two among several factors affecting the
decisions by those from the lowest social classes about whether
to enter higher education".
The benefits for those who gain qualifications through higher
education are many and varied, ranging from well documented financial
returns, including the so called 'graduate premium' on earnings
and a lower risk of unemployment to more general social and personal
benefits, including better health and personal satisfaction.
There may be risks - such as a build-up of indebtedness and the
creation of unrealistic expectations - which students should be
encouraged to evaluate on the basis of sound information and high
70. The Performance and Innovation Unit, reporting
on the Government's use of loans, notes that the returns from
post-compulsory education are not evenly distributed across social
classes and that students from poorer backgrounds experience much
greater variation in the financial return on higher education
than students from more privileged backgrounds.
Recent research from the Council for Industry and Higher Education
(CIHE) confirmed that "the returns associated with degree
level qualification vary substantially according to the type of
institution attended, the subject studied and the social class
of the individual".
Further scrutiny of the evidence revealed that even after controlling
for the type of institution "social background continued
to have a statistically significant effect on the returns achieved
by degree holders"
and that this pattern persists despite greater numbers of students
from disadvantaged backgrounds coming into higher education.
71. This information helps to put low participation
rates in context, revealing them to be a rational response to
a less favourable risk/reward calculation than exists for more
Mr Richard Brown, Chief Executive of CIHE, wrote to us:
"The fact that there are lower financial
returns to those from lower social groups would also argue for
changes in the system of financial support for such individuals.
If they are more averse to building up debt, yet have larger debts
on leaving higher education and then do not get the most highly
paid jobs, irrespective of the institution they attend, then the
financial odds and risks are stacked against them".
72. This picture represents a difficult but vital
challenge for Government and higher education. That the potential
of individuals from disadvantaged social backgrounds remains undeveloped
is unacceptable in both social and economic terms.
73. Intermittent leaks over a number of months have
offered tantalising glimpses of a fascinating private debate at
the heart of Government on the review of student support. We
expect that the current review of student support will thoroughly
explore every possible model for support and offer an in-depth
analysis of their advantages and disadvantages.