‘Unfair and demoralising’: Thousands of graduates earning less than living wage after five years

Shocking new data shows tens of thousands of university graduates are earning less than the national living wage five years after completing their degree.

A new report from Policy Exchange on the UK’s higher education sector has found that more than a quarter of graduates with degrees such as sociology, creative arts and design and performing arts earn less than the national living wage (£12.71 per hour for those over 21) five years later.

Policy Exchange is calling for reform within a system it says is at “breaking point”. Britain’s decade-long fee freeze, along with high inflation, pension pressures and fewer international students have created a “perfect storm of funding crisis”, it said.

Shadow education secretary Laura Trott said: “The report reveals how unfair and demoralizing the current system has become.

“Many graduates do exactly as they are told to secure a better future, but find themselves burdened with debt due to qualifications that do not provide them with the opportunities they were promised.”

The report found that in 15 of 34 broad subject classifications, including the broadest subjects such as sociology, creative arts, design and performing arts, more than a quarter of graduates earned less than the national living wage after 5 years.

In 27 of 34 people, average graduate earnings after five years were less than the national average earnings for full-time workers of £39,039.

According to the report, only 57 percent of graduates are working full-time 15 months after graduation, a third of graduates are not working in graduate jobs, and at least 30 percent of degrees do not provide a net economic return when measured from both an individual and taxpayer perspective.

Among other recommendations, the think tank called for higher academic standards and a 30 percent reduction in the number of people going to university.

It is also calling on the government to freeze wages for five years and scrap real interest rates on Plan 2 student loans, which will be capped at 6 per cent from September.

The maximum tuition fee for British university students is capped at £9,790 per year for standard full-time courses, and the average student will leave university with £53,000 in debt.

Labor announced it was capping interest rates for Plan 2 and Plan 3 borrowers in April following significant pressure on repayment costs.

The government has faced widespread criticism over its student loan system, with calls to cut interest rates to prevent graduates from facing mounting debt.

The findings come two weeks after a report revealed the number of young people not working or in education rose above 1 million for the first time since 2013.

A government spokesman said: “We are cracking down on poor quality courses so students can be sure they are getting value for money from their university degree, while making the system fairer by reintroducing targeted maintenance grants and capping interest rates on student loans.

“The problems we inherit are deep-rooted and that is why we are bringing forward the biggest youth employment reforms in a generation, including £2.5 billion in funding, more apprenticeships and business grants.

“Early intervention is also crucial – we help schoolchildren prepare their careers for the future with new, top-quality vocational routes and better career advice.”