Debt and Unemployment: The Story of Graduate Job Seeking

In 1997, during the election campaign that would win Tony Blair his first term in 10 Downing Street, Mr. Blair categorically stated that ‘Labour has no plans to introduce tuition fees for higher education’. As is not uncommon with the promises made by politicians, Mr. Blair failed to stick to this line, and introduced tuition fees under a means tested system in 1998. Over the course of the next two decades, subsequent governments would slowly increase tuition fees to the current level, despite vowing not to. After years of debate, protest, and price increases, it is time to ask: how much is your degree really worth?

The current maximum price of a year in higher education is £9,250. For a standard undergraduate degree consisting of three years, this will amount to £27,750. This does not include the cost of accommodation (even if the university provides it), academic supplies, printing, photocopying, membership to the student’s union, travel costs etc. All in all, the introduction of tuition fees for higher education opened the door for education to be based on financial stability rather than academic merit. Over the period 1998-2018, tuition fees in England rose from £1,000 to £9,250, meaning that a year in higher education is now worth 825% more than in 1998. This number cannot simply be put down to inflation. If the initial tuition fee was to be adjusted for inflation alone, then it would have increased to £1,729 in 2018. This begs the question: how did the government arrive at that number?

I would love to say that the quality of teaching in British universities has increased by 825%, but this simply is not true. One lecturer went as far as to say that ‘The temporary nature of my work means that I lack the time not just to fulfil my academic and pastoral duties with students, but also to develop my own ideas or teaching style’. In reality, the government’s habit of increasing tuition fees by arbitrary amounts is not difficult to fathom. The fact that I owe the government some of my wages for years after graduating is just the same thing as taxation.

Student loans are heralded as a mechanism which allows anyone to go to university and get a degree – thank you government, right? Unfortunately, not. Student loans, like most loans, come with interest attached. In my case, a student debt of approximately £62,400 at the current interest rate for repayment would mean that I owe the government around £298,917 by 2047. Of course, this is calculated assuming that I earn enough to start repaying and that I do not pay it off after thirty years (at which point the remainder is written off).

Naturally, the chances of me actually paying this amount of money are slim, but the fact remains that the value of my university education changes in line with how fast I can pay it back rather than how good the education actually was. Moreover, this change continues to happen even after my teaching has finished, at which point the level of education which I have received is fixed. Clearly, increases in tuition fee payments are just another way that the government found to get some cash.

Unfortunately, even if you do graduate with a good degree from a prestigious institution, the challenges that you face are not insignificant. Financial debt aside, a great many recent graduates face difficulty in finding employment following the completion of their studies. The average unemployment for recent graduates in 2020 reached as high 12%, which is approximately 2.5X higher than the average unemployment rate of the same period. This unemployment is, to some degree, not caused by a lack of jobs or a lack of well-trained graduates to fill them.

One significant factor working against recent graduates is their “lack of experience”. Often, entry-level jobs are advertised as requiring “X years of experience in a similar role”. Requirements like this make it almost impossible for even the most well-educated graduates to secure a role, because they have not spent X years in a job, but in academia. This factor can work to such a degree that even a graduate with a first-class degree in a directly related subject cannot secure a job without also completing workplace internships or similar. Most internships of this type are unpaid, which means that students are expected to give away their labour for free while studying just to have a better chance of employment once they graduate.

The second factor that works against graduates in this case is the lack of an adequate communications network between those hiring, and those wishing to be employed. It is often plausible that there is a well-trained graduate actively searching for a job and a job that would be perfect for them, which cannot be matched up because of inefficiencies in the job market. This type of unemployment is known as frictional unemployment. This frictional unemployment can also cause a secondary type of unemployment known as structural unemployment, which is where a mismatch in the skills of an employee and those desired by the employer are evident. Those graduates who leave university and cannot find a job often enter into work which they may be “overqualified” for in an academic sense, but unprepared for in a practical sense, such as waiting staff, baristas, ushers, personal assistants etc. In these cases, the degrees of students do not adequately prepare them for tasks like making a cappuccino, and so they may find themselves unemployed because they cannot perform these tasks adequately where others can.

The solution to the case of graduate unemployment is simple: a better communications network. By implementing a far-reaching and comprehensive network in the job market, those perfect jobs that well-trained individuals desperately want will be found. This, in turn, would allow the misallocation of labour in the workforce to be targeted and enable more productivity, work satisfaction and benefits for society as a whole. There are a great many problems with both the system of higher education and the job market. There is a lot of work which must be done to prevent exploitative “opportunities” like unpaid internships, the misallocation of resources and the dissatisfaction of jobseekers. There is a way to make university degrees worth something, but raising the price is not it. There is a way to give people experience of the workplace, but not paying them is not it. There is a way to increase the chances of employment for those looking for work, but it cannot be done without investing in the communications infrastructure that will make it happen.

Written by Isaac Knowles

Isaac Knowles is a columnist at DecipherGrey.