Bad investment

十一月 24, 2006

I have been watching with interest the steady decline in the graduate premium (the extra lifetime earnings of a graduate over a non-graduate). This has gone from £400,000 in 2002 (Walker and Zhu) to £150,000 (Alan Johnson last year) to £100,000 (Opinion, November 9). At this rate, it will stop being financially worthwhile in about 2009.

If you take the total cost of a degree (fees plus loss of earnings) and invest it in a building society at 4 per cent, then you'll get a better return than £100,000 in about 18 years - less than half a working lifetime and (given student drop-out rates) at lower risk. Unless some universities can provide a better product at lower risk their future may be bleak.

Ormond Simpson.
Open University



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