QUARTER OF UK GRADUATES EARN BELOW LIVING WAGE AFTER FIVE YEARS

A new report from Policy Exchange has found that more than a quarter of graduates in 15 of 34 broad subject classifications earn less than the national living wage of £12.71 per hour five years after completing their degree. The subjects affected include sociology, creative arts and design, and performing arts. In 27 of the 34 subject categories, median graduate earnings after five years fell below £39,039 — the national median earnings for full-time employees. The findings indicate that more than 150,000 graduates a year fail to reach that median salary threshold.

Policy Exchange's report also found that only 57 per cent of graduates are in full-time work 15 months after graduation, while a third are not in graduate-level jobs. At least 30 per cent of degrees delivered no net economic return when measured for both the individual and the taxpayer. The think tank described the UK higher education system as being at a "breaking point", attributing the situation to a decade-long fee freeze, high inflation, pension pressures, and a decline in international student numbers. The maximum tuition fee for domestic students currently stands at £9,790 per year, leaving the average graduate owing £53,000.

Policy Exchange has called for higher academic standards and a 30 per cent reduction in the number of students entering university. It is also urging the government to introduce a five-year fees freeze and abolish real interest rates on Plan 2 student loans, which are set to be capped at 6 per cent from September. Shadow education secretary Laura Trott said the report exposed how graduates had taken on debt for qualifications that did not deliver the opportunities they were promised. Labour has separately announced plans to cap interest rates for Plan 2 and Plan 3 borrowers.