We know that higher education offers huge value to individuals, the economy and society. So it was pleasing to hear Sam Gyimah note in his speech to UUK that “going to university is worth it”.
There is ample evidence to suggest a good degree is still worth the investment. But one area of degree attainment that has been overlooked in recent years is that of the mature age student.
Meeting IT Ryan
Ryan Peddie, who’s in his late thirties, was working in IT but, as his company started to restructure and face financial difficulties five years ago, he made the decision to study finance with The Open University. Ryan transferred to the under-pressure finance department in his company and started applying his new skills and knowledge. As he climbed the ladder, his company’s fortunes started changing. It now has an annual turnover of £7m. Ryan is now finance director and has doubled his salary.
Ryan’s pay increase didn’t happen by chance. His investment in HE will keep proving its worth throughout his career. He is not alone. A new study by London Economics, commissioned by the OU and using the same methodology as earlier work for the UK government, has estimated that completing a part-time degree in your late-thirties in England is associated with a total increase in lifetime earnings of £238,000 for men and £147,000 for women in real terms compared to what someone with A-levels could expect to earn. And with that, comes up to £123,000 more in tax paid to the Treasury over the course of that graduate’s working life.
Putting this into Treasury speak, the net present value of these earnings benefits using the discount rate in the Green Book is £109,000 for men and £63,000 for women. Looking narrowly at the benefits to the Exchequer via increases in tax revenue, the internal rate of return to the public purse – or what would be required to make an alternative investment generate higher returns than investing in someone completing a part-time degree – is estimated at 25% for male graduates and 19% for female graduates. This is substantially higher than the cost of borrowing facing the government, currently 2%. The benefits are even higher for those who begin their degree without the traditional entry qualifications of two or more A-levels demanded by most universities.
The benefits of part-time study, not only to personal and career development, but also to the strength of the economy are clearer than ever. This is why we’re calling for the UK government to provide financial support to part-time students in England – either through a tuition fee grant or through maintenance grants, as is being implemented in Wales following the Diamond Review. By reducing the upfront costs of study it would help reverse the dramatic fall in mature-age enrolment numbers since 2012. In addition, we think that better incentives for more flexible study through shorter courses, better IAG for adults and support for progression through to HE at levels 4 and 5 will also help.
There are huge potential returns for both students and the public purse, and that’s ignoring the wider benefits of HE including better health and well-being, lower crime rates, increased productivity and so on. This research proves that supporting people to study part-time is a smart investment for the UK government to make.
The full report makes for interesting reading, concluding that “the analysis illustrates that there are substantial lifetime benefits to graduates and the Exchequer associated with Open University part-time degrees.” Ryan would agree, and so would thousands of others. It’s time to help many more thousands get that chance too.