Drop in student numbers 'could cost economy £6 billion'

A drop in student numbers of 30,000 this year could cost the country more than £6 billion over the next 40 years, according to a new report.

January 17, 2013

The report by consultancy firm London Economics also finds that the Treasury gains £94,000 for every student that is educated to bachelor's degree level.

Once all the costs are taken into account, the Treasury reaps a 10.8 per cent net return on its initial investment in funding an undergraduate degree, it says.

Those students who take a master's degree provide a £62,000 return in future taxes paid to the Treasury - a 25 per cent net return, the reports claims.

The report, titled What's the value of a UK degree?, was published on 17 January by Million +, which represents a number of post-92 universities.

Based on an analysis of research commissioned by the Department for Business, Innovation and Skills, the report estimates the monetary impact to the UK economy of the fall in student numbers this year.

It says a reduction of 30,000 undergraduate students would cost the UK economy at least £6.6 billion over the next 40 years.

Patrick McGhee, chair of million+ and vice-chancellor of the University of East London, said the report showed why it was vital to continue investment in higher education.

"Government investment in higher education remains a remarkably good bet, even in these challenging economic times," said Professor McGhee.

"As well as opening up new opportunities for individuals, the Treasury reaps exceptionally high returns from its investment.

"If efforts to increase access to university are not sustained, these significant benefits could be eroded with longer-term consequences for the economy as well as individuals."

The report also estimates that the average net earnings benefit for graduates - otherwise known as the "graduate premium" - was £115,000 over a working lifetime.

A master's degree delivers an additional premium of approximately £59,000, the report says.

Additional "spillover effects" of higher education attainment on the wider economy, such as enhanced productivity and earnings achieved by other workers from working alongside graduates, could be as great as the direct effects of higher education, the reports says.

Higher education exports are valued at £8.8 billion, of which approximately £7.6 billion is associated with international students coming to study in the UK, the report adds.

jack.grove@tsleducation.com

You've reached your article limit

Register to continue

Registration is free and only takes a moment. Once registered you can read a total of 6 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments
Register

Have your say

Log in or register to post comments

Featured Jobs

Assistant Professorship in Behavioural Science LONDON SCHOOL OF ECONOMICS & POLITICAL SCIENCE LSE
Foundation Partnerships Officer LONDON SCHOOL OF ECONOMICS & POLITICAL SCIENCE LSE

Most Commented

James Fryer illustration (8 September 2016)

Some lecturers will rightly encourage forms of student interaction that are impossible for those covering their faces, Eric Heinze argues

University of Oxford students walking on campus

University of Oxford snatches top spot from Caltech in this year’s World University Rankings as Asia’s rise continues

Handwritten essay on table

Universities must pay more attention to the difficulties faced by students, says Daniel Dennehy

Theresa May entering 10 Downing Street, London

The prospect of new grammar schools on the horizon raises big questions for HE, writes Nick Hillman

Nosey man outside window

Head of UK admissions service Mary Curnock Cook addresses concerns that universities might ‘not hear a word’ from applicants