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Baroness Helena Morrissey DBE is a City ‘superwoman’ who, among other senior roles, ran Newton Investment Management for 15 years while supporting a family of 11. She also founded the 30 Percent Club, which seeks to bring more women on to company boards
My first summer holiday job – aged 14 – was picking tomatoes at a local farm; back-breaking work that, bizarrely, turned my hair green.
At 16, I found more cerebral employment assessing student grants. There was no discretion involved, I just applied a strict set of rules to calculate the amounts – and dealt with disgruntled parents who would arrive at my desk to express their disappointment.
But those were the good old days. In the 1980s, university tuition was free, and every student had a minimum maintenance grant.
When I went to Cambridge University at 18, I didn’t have much money, but wasn’t unduly stressed about finances thanks to my parents; mum took on extra teaching hours to help me with living costs.
And when I needed accommodation in my second year, I rented a room in a professor’s house; his daughter had just started at Oxford, so the family had a spare room available in term time for a very modest sum.
How things have changed. Now, universities in England and Northern Ireland can charge up to £9,250 in annual tuition fees (£9,000 in Wales). You might find cheaper fees as a home student in a British nation; Scottish students studying locally pay just £1,820, for example.
Of those who are eligible, 95pc of students take out a loan to cover these fees, amassing an average total debt of £45,000 by the time they graduate – the highest of any country, even America. And that’s despite a record 55pc of British students taking paid employment, working an average 13.5 hours a week alongside their studies.
In many university towns student accommodation is in scarce supply and fiendishly expensive – my daughter has to pay £800 a month for a room for the entire year, even though she’s only there for half the time.
It feels like a dismal situation. After a decade of no increase in tuition fees for “home” students, universities say their current funding model is broken. They are taking record numbers of higher-paying international students, whose annual tuition fee averages £22,200.
Meanwhile, high inflation has put repaying the debt plus interest (currently charged at 3pc above the Retail Price Index) out of reach for many graduates; the Government estimates that only around a quarter of students who entered university in 2022/23 will repay their debts in full.
For students who enrolled before this year, repayments start when they earn over £27,295 and 9pc of their pay over this threshold is deducted. This chips away at after-tax income for much of their working lives, at a time when it’s already hard to get on the housing ladder or meet basic living expenses. Any remaining debt had been written off after 30 years – but with over £200bn of student debt outstanding, that’s a big burden for the taxpayer.
The Government has recently changed the rules to try to improve the loan recovery rate; interest will be capped at the rate of inflation, but the salary threshold for new students is falling to £25,000, and any outstanding debt will not be written off for 40 years.
The reduced threshold and longer term mean that lower and middle-income earners will pay significantly more in total lifetime repayments than before the reforms – and, in many cases, more than higher-earning graduates, who incur less interest since they pay back their debt quicker. London Economics forecasts a graduate earning £37,000 by 2030 will repay a total £63,100, compared with a graduate earning £70,000 who will pay back £55,000.
Yet despite all the daunting figures, research by AJ Bell suggests that 80pc of men and 65pc of women are confident they will be able to fully repay their student loans.
My daughter-in-law is one of the optimists – even though by the time she completes her three-year midwifery qualification following an undergraduate degree she will have taken out six years’ tuition and three years’ maintenance loans. The midwifery course involves working unpaid for half the year, but students must still pay the full £9,250 annual tuition fee.
Even before interest, the total bill for her studies (including her previous History degree) adds up to at least £75,000. The only financial help is a £5,000 annual grant from the NHS learning support fund, and reimbursement of travel expenses.
Of course, it’s not all about the money – especially for those following a vocation.
A university degree remains a key driver of social mobility. The proportion of 18-year-olds entering university in 2022 was 37.5pc, close to the record high of 38.2pc recorded in 2021. But I would not be surprised to see a reversal of the long-term upwards trend given the economic pressures.
Six of our seven children who’ve reached 18 have entered higher education, and it’s a relief that four finished their studies before the cost of living crisis – although repeated lockdowns detracted from their experience. We now have just two children at university, and one has a part-time job which covers her expenses, apart from rent.
Our youngest daughters, now 14 and 16, should consider all the options. University is more than just a financial transaction, but with a quarter of degrees unjustifiable in terms of earning power, the decision needs to be a considered one – or an acknowledged luxury.
I am not going to discourage them, but neither will we push them to go “come what may” – or to study a subject they don’t enjoy simply because it has better career prospects.
Think tank Onward suggests no humanities degrees make it into the top 10 for earnings potential – but it would be a shame if everyone took a purely utilitarian approach. As a Philosophy student, I learned never to accept conventional wisdom, for example, which proved highly valuable (literally) when I became a fund manager.
But unlike the “autopilot” days when university seemed an obvious choice, today’s reality is more complex. A school leaver apprenticeship, a technical or vocational training course, or “following the dream” (one of our younger daughters is sporty, the other loves drama) are all contenders for those years when they are a not-quite-grown-up, not-quite-child.
All I know is that they must try to avoid starting young adult life with a big debt, weak job prospects and high levels of anxiety.
Is university worth it? I’ll encourage my youngest children to consider other options
A degree remains a key driver of social mobility – but should no longer be the default