Chair's Blog: Higher education - a much better investment than a savings account

18 Jan 2013

Professor Patrick McGhee, Chair, million+It might be asked – why go to university, when money is tight, fees seem prohibitively high, and employment prospects uncertain? I always tell students and prospective students that a degree is worthwhile, and worthwhile on very many levels. I do not want to be part of a society that knows the cost of everything and the value of nothing.

The life-changing impact of a degree is immeasurable. Being inspired by new ideas, forging life-long friendships, trying out different and diverse activities, volunteering and building up invaluable work experience - going to university is a genuine once in a lifetime opportunity.

However, knowing that the economic costs and benefits stack up favourably could be the last nudge someone needs to finally take the plunge.

That is why our new report, ‘What’s the value of a UK degree?’ based on economic analysis undertaken by London Economics, is so vital.  Individuals do really reap rewards from studying at university. People can expect to earn, on average, £115,000 more over their working life if they have a degree. Perhaps unsurprisingly, men and women’s earning potential is not the same. Women take more time out of the workplace for childcare but the difference in earnings for women with a degree, compared to women without, is actually greater than for men.

The report clearly shows why governments ought to be investing in higher education. The Treasury gets back over a 10% rate of return on its investment in an undergraduate degree.  For a Master’s degree, due to much lower levels of public funding, the rate of return is a whopping 25%. Compare that to the miserly 1-2% rates we are getting on our savings accounts.

So it’s good news for taxpayers as well as those fortunate enough to go to university.

As the Vice-Chancellor of the University of East London, situated in one of the more economically challenged areas of London, I know from personal experience the value that a university can add to its local community.

Half of our students come from east London itself, half are mature students and two-thirds are from a Black, Asian or Minority Ethnic background. It’s certainly not the only indicator of poverty but 25% of our students are eligible for free school meals. We put the ‘local’ into  university, by nurturing local talent as well as injecting new talent into the area. Very large numbers of teachers, social workers and youth workers in East London have also graduated from UEL.  Although we support all enterprising students, through our internationally recognised Centre for Excellence in Women’s Entrepreneurship we support the next generation of female wealth and job creators, many of whom are already building new opportunities for the local economy.  We can confidently say that we educate and skill-up local people and they give back to their local community by staying and working in the area.

Yet our reach is wide, nationally and internationally, with students and staff from around the world working and learning side by side. We are growing overseas links, not least with Brazil - following our key role in the Olympics and Paralympics - and helping develop the 2012 legacy through research linked to the next host city.  We support local students, through targeted bursaries to carry out projects overseas through our Going Global Scheme.  We encourage students to greater academic excellence and achievement through the UEL student Research Internship Scheme. This allows undergraduates the chance to undertake paid work as collaborators with our research teams for up to ten weeks. These funded opportunities allow all of our students to have a chance to secure distinctive learning experiences without many of the financial barriers.

The cultural capital universities pass on is considerable but we all know how hard graduates are finding it to secure work. All the evidence shows that graduates survive a recession better than those without a degree and are likely to be more resilient in the labour market long-term. Universities increasingly develop students’ vocational and professional skills to complement their academic ones and identify student placements and work experience opportunities. In many parts of East London employment is less than 60% but for UEL graduates it’s 80%. The added value for businesses, public services, professions and industry is difficult to measure. The impact on confidence, culture and creativity in communities is impossible to count.

Universities like UEL forge crucial links with FE colleges and other training providers, employers and businesses. They are key engines of growth and regeneration.

What’s the value of a UK degree?’ backs up my local experience with critical economic data which leaves me in no doubt that higher education is potentially good for everyone. It would be a travesty for potential students and the country as a whole, if the recent advances made in increasing participation in higher education are lost due to short-term thinking or ill-judged funding decisions. If Ministers do not invest in a campaign to promote the value of higher education it will undoubtedly cost us all dear.

Professor Patrick McGhee

Twitter: @VC_UEL

Additional information updated on 23 January 2013: Professor Patrick McGhee served as Chair of million+ from 1 May 2012 to 22 January 2013. He was replaced by Professor Michael Driscoll as acting Chair of million+ on 23 January 2013. Michael Driscoll is the Vice-Chancellor of Middlesex University.