Alan Ryan

January 28, 2005

Graduates earn 40 per cent more over a lifetime than non-graduates, but what exactly does that differential reflect?

If you told Isaiah Berlin that you had liked a book or an article, you always provoked the same question: "Was it new, true or important?" If you hesitated, he would continue: "Old, trivial falsehoods?"

The news from the Higher Education Funding Council for England that poor children go on to university at about a sixth of the rate of the well-to-do must have struck readers of The Times Higher as passing two tests and failing the third - yes, it's true; yes, it's important; but it's been very well-known for 40 years.

It is not remotely true, as the Prime Minister supposes, that "we are all middle-class now". Ten minutes trawling the internet reveals that participation rates vary dramatically by class, that A-level grades vary dramatically by class and that the worse-off have a lower participation rate and disproportionately go to institutions that will give less of a boost to their careers than the more upscale places would.

The Hefce research does raise a lot of other interesting questions.

One surprising finding is that debt doesn't deter the poor any more than it deters the better-off. It ought to, because the poor incur a lot more of it than the better-off - the latter benefit from the immemorial disposition of the well-off to invest resources in their children, which means that parents, not children, pay the freight.

Bahram Bekhradnia, director of the Higher Education Policy Institute, is particularly pleased with that finding because it delivers a knock-out blow to claims by Claire Callender, a government student finance adviser, that top-up fees would deter the worse-off and damage the Government's access ambitions. That, however, is barely the beginning of the argument. Why would hard-up students with worse chances of completing their courses than their better-off peers contemplate paying as much for courses that yield a much lower pay-off? Why would they contemplate paying more for a course at the University of Central Lancashire than their equally hard-up peers will be paying at Cambridge University? If it were possible to believe that they were seized with a passion for learning, it would be fine.

One of the pleasures of working for the Open University was that you came across enormous numbers of people who had really fallen in love with philosophy, art history, biology and a great deal more.

But all the evidence is that the great majority of students elsewhere regard a degree as a meal ticket. And they are quite right. The differential between school-leavers and degree-holders remains obstinately high.

Richard Freeman, the Harvard University economist, has made himself famous by predicting for the past 20 years that the differential between the wages of degree-holders and the wages of high-school graduates without degrees was bound to shrink; until very recently it has widened instead.

So, if you are a prospective student, no matter how little pleasure you get from academic work, no matter how dreary the courses, how boring the teachers, how grotty the housing and bar, you're getting a bargain. A wage differential of 40 per cent over a working lifetime is a good rate of return on your investment. But that doesn't show that it all makes sense, nationally speaking.

The question to which nobody seems to have an answer that will persuade all spectators is what that differential reflects.

There are two extreme possibilities.

The first is that it reflects a real difference in productivity between degree-holders and the rest. The other is that the possession of a degree is used by employers as an easy way to draw a line between the folk they are willing to employ and those they aren't.

The first extreme position seems incredible; the rate of increase in productivity in the British workforce is unbudgeable, and it certainly hasn't improved as it ought while we have pushed the participation rate from 5 per cent to 40 per cent. And it is not easy to square with the annual report that half the graduate population is doing routine tasks for which degree-level skills are not needed.

On the other hand, the second view seems hard to square with the annual report that employers find graduates illiterate, innumerate, impolite and undisciplined. You'd have thought that if that were true, employers would treat a degree as a warning sign and the differential would disappear next week.

What does seem true, and important for the allocation of national resources, is that the individual's reasons for getting into debt are defensive but rational - to avoid being stuck with poor pay and no prospects - while the Government's reasons for wasting the students' money on equipping them with the wrong skills remain inscrutable.

Alan Ryan is warden of New College, Oxford.

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