The decline of 30,000 undergraduate students would cost the UK economy £6.6billion over the next 40 years, according to a report released last week by the think-tank million+, in partnership with the consultancy firm London Economics.
The stated basis for these findings is the rate of return the Treasury makes from its investment in students once they have finished their degrees and begin paying tax. London Economics found the treasury reaps a 10.8% return from a single undergraduate degree, approximately £94,000. This then rises to a 25% rate of return, £62,000, in future taxes paid by those who study a Master's degree.
Following the rise in student tuition fees to £9000 a year in 2012, the number of University applicants to begin in September last year was reported to have fallen by 12%. Meanwhile in December it was reported that the number of applications received by the University College and Admissions Service (UCAS) for University courses beginning in 2013, had declined by 8.4% from the same point in time the previous year.
A spokesperson from Cambridge University, however, stated that the number of applications it received last year had "increased slightly" and that "initial indications are that our position this year is largely unchanged on last."
Patrick McGhee, chairman of million+, emphasised how the report illustrated the importance of continued investment in higher education, arguing; "government investment in higher education remains a remarkably good bet". In addition to the Treasury benefitting, the report found "spill-over effects" from higher education into the wider economy through earnings achieved by those working alongside graduates. Students themselves also benefit; the report placed the average net benefit to a person with an undergraduate degree at £115,000, whilst a Master's was found to add an additional net benefit of £59,000.
Rebecca Bradley - News Reporter
Photo: Jimmy Appleton