Giving universities a bad name

This morning, Onward publishes new analysis showing that universities with the lowest median graduate earnings issue the most unconditional offers and have awarded their vice-chancellors the largest average pay rises in the six years since the introduction of higher tuition fees.

Vice-chancellor pay and graduate earnings

The growth in vice-chancellor pay in recent years is well-rehearsed and often criticised. However, less discussed is the relationship between vice-chancellor pay and the graduate earnings they deliver. There is a good argument to be made that, if a vice-chancellor is increasing the long-term earnings value of their degrees to their students – the ultimate customer – a higher salary would be justified.

Unfortunately, our analysis suggests that the opposite is true. There is a negative correlation between rises in vice-chancellor pay and graduate earnings, suggesting that some vice-chancellors are being generously rewarded despite failing to deliver decent earnings for graduates, or the taxpayers that ultimately fund their study. Indeed, the average pay rise for vice-chancellors of the lowest decile of universities by graduate earnings was 24%, more than triple the pay increase for vice-chancellors whose universities delivered the highest graduate earnings.

The growth of unconditional offers

Onward’s analysis also reveals that the use of unconditional offers is strongly correlated with lower graduate earnings.

Last year, the number of unconditional offers issued by universities was 22 times higher than in 2013, with the bulk offered by just 20 universities. The growing use of unconditional offers is worrying and warrants greater scrutiny. When we study the relationship between graduate earnings and the use of unconditional offers, we find that those universities who rely to a larger extent on unconditional offers to attract students deliver median graduate earnings far lower than those that do not.

The top decile of universities by share of unconditional offers delivered median earnings five years after graduation of £23,150 and £21,890 for male and female graduates respectively. This compares to £30,180 and £26,280 for the tenth of universities who issue the fewest unconditional offers.

This equates to a 23% earnings gap between the most and least prolific users of unconditional offers for male graduates and a 17% gap for female graduates. In financial terms, this means that a male graduate of a university that offers the most unconditional offers will earn on average £7,030 less per year after five years than if they had attended a low-issuing university. The equivalent figure for women is £4,390 lower.

The scandal of “conditional unconditional” offers

Onward also analysed the use of what UCAS terms “conditional unconditional” offers – conditional offers that are converted to unconditional offers if a student makes the university as his or her primary choice.

Last year, a total of 66,000 “conditional unconditional” offers were made to school leavers in England, Wales and Northern Ireland, up from zero such offers in 2013. These offers made up 6.9 per cent of all offers made to 18 year olds in 2018, but were only used by 30 universities out of 154, suggesting that some universities are using such offers prolifically to attract students.

Higher numbers of “conditional unconditional” offers are associated with lower graduate earnings. Where “conditional unconditional” offers make up more than 15% of total offers, male and female earnings are around £3,000 lower than for those graduating from institutions that issue fewer such offers.

Research has shown that over 60 per cent of students say that receiving an unconditional offer had an impact on where they ultimately chose to study, which raises questions as to whether universities are using conditional unconditional offers to draw in students that may otherwise not choose their university, leaving the student poorer in the long-run as a result.

The value of a university degree

The research follows Onward’s report, A Question of Degree, which found that up to one-in-four students are enrolled on courses which were not economically worthwhile to either themselves or the taxpayer. One-in-ten are currently studying courses that mean they will not earn more than the £25,000 a decade after they graduate, meaning they still will not be repaying their student loan.

Consequently, a considerable number of current graduates would have been economically better off studying for an apprenticeship or a technical course that typically deliver higher earnings than some degrees, without the cost of a student loan.

The full report is available here. 

For further details or for press enquiries, please contact Will Tanner on will.tanner@ukonward.com.