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In the current economic climate life is tough for university graduates who often face fierce competition for jobs as well as hefty student debts to pay off when they come out of university. The UK’s National Union of Students estimates that a university education costs £10,133 for each academic year, without taking into account living expenses. The prospect of their children starting a career over £30,000 in debt has led many parents to question whether a university education is actually worth the expense.
And yet a recent study from the US provides compelling evidence that it is. According to the research from Pew Research Center, graduates aged from 25 to 32 earn on average $17,500 more than school leavers, are more likely to be in full-time rather than part-time employment and are far less likely to be unemployed.
The correlation between higher education and earnings is consistent throughout the generations – graduates beat school leavers across the board – however the income disparity between graduates and non-graduates is widening. Whereas for the baby boomers born in the late 50s and early 60s and starting work in the late 70s and early 80s, the difference in median annual earnings between school leavers and university graduates was $14,245, for those entering the workforce in 2013 the difference had risen to $17,500. And worse still for school leavers, average earnings are actually falling – from $31,384 in 1965 to $28,000 euros today.
Record numbers of students are enrolling at university, both in the UK and the US, and they face many challenges as they graduate and start on their careers paths. Unemployment rates are higher than for previous generations, average earnings have not changed significantly and it takes them longer to find a job. However the situation is a lot worse for school leavers who face unemployment rates of 12.2% (compared to 3.8% for graduates), take even longer to find employment and earn significantly less.
So the evidence points overwhelmingly to the fact that in spite of the high cost, a university education is definitely the best choice to give your child a leg up on the career ladder. But how can parents help their children to graduate without crippling debts that take years to pay off?
The answer is in forward planning. The earlier you can start making provisions for your child’s further education, the better. A regular savings plan started early will benefit from compound interest to build up a healthy pot to see your child comfortably through university and out the other side debt-free. What better gift could you give them?
For help with education fee planning get in touch today.