New research by NerdWallet (@NerdWallet), one of the UK’s leading price comparison sites, has discovered that 66% of current and former university students think a university degree increases earning potential. Even 60% of those who do not hold a university degree believe this to be true. This is despite a backdrop of rising university fees, a steady uplift in the numbers of those attending university and the student experience being compromised as a result of Covid-19.
Concerns about the financial implications of university are centre stage though. Despite the majority believing that a degree will improve earning power in the future, many worry that the financial investment isn’t worthwhile mainly because the debt burden would be too much.
But it is a tale of two halves. For some, student loans are not as worrying. The perspective of a third (33%) of the alumni and current undergraduates championing a university education is that “it is a low-risk loan, which I only need to start paying back when I reach a certain salary and it eventually gets written off if I have not paid it”.
Seen through the lens of a student loan being low-risk borrowing, and with 26% of those in favour of university believing that a degree would get them the job they want, it is easy to see how the majority of those surveyed still think a degree is a good idea.
Opinions could change quickly though, given that the government is proposing to lower the threshold for student loan repayments*, meaning that graduates would start paying their loans back at a lower salary, potentially cutting their take-home pay by more than £800 annually, depending on what threshold is chosen.
“At this pivotal stage in a young person’s life, it’s important for them to understand the financial implications of going to university. There are many options available including getting out into the world of work to get first-hand experience or even setting up on your own if you have a great idea,” says Denise Ko Genovese, a personal finance expert at NerdWallet. “But despite widely held concerns about student loans putting young people in debt, it’s interesting to know that most graduates and undergraduates think that a student loan returns good value and that holding a degree will help them to get more from their careers.”
* Currently going through parliament – media report the threshold may be lowered to between £20,000 and 23,000 – it is currently £27,295.
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