A generation risks being put off university just when we need graduates most

Current public debate, with headlines about student debt, graduate underemployment and a supposedly collapsing graduate jobs market risk the impression that university is no longer a worthwhile investment

When Daniela Amodei, co-founder of world-leading AI firm Anthropic, was asked recently whether she regretted her English literature degree, her answer was unequivocal: no. In fact, she suggested the human capabilities developed through the humanities – such as communication, empathy, curiosity and critical thinking – may matter even more in the age of artificial intelligence.

Graduates share her views. A study last year found that only three per cent regret going to university.

Yet current public debate, with headlines about student debt, graduate underemployment and a supposedly collapsing graduate jobs market risk the impression that university is no longer a worthwhile investment. In reality, much of this discussion mixes up the current slowdown in the labour market and a system that puts too high a share of the cost of higher education onto students, with a long-term decline in the value of higher education.

Consider one widely reported statistic: graduate job vacancies had fallen “below 10,000”. This comes from one particular job-board definition of “graduate job”. If it reflected the actual labour market, we would expect to see a dramatic deterioration in graduate employment outcomes.

But we simply do not.

The unemployment rate for recent graduates is about six per cent, less than half the overall youth unemployment rate of around 15 per cent. The most recent graduate outcomes survey taken in late 2024 and published last summer, showed 15 months after graduation, around 60 per cent of employed graduates were already working in highly skilled roles. While the market has undoubtedly evolved since then, that 60 per cent figure has held steady over the previous five years, only coming down to 58 per cent even through the Covid dip.

Meanwhile across a working lifetime around 88 per cent of graduates are in employment, compared with roughly 68 per cent of the wider population.

Concerns about young people not in education, employment or training – so-called NEETs – are legitimate, as those numbers have risen above one million. But according to the Labour Force Survey, only around 5-10 per cent are graduates. Most are young people who never entered higher education at all.

None of this means higher education should be immune from scrutiny. Students are right to demand a high-quality experience and good outcomes from their degrees. Given the costs involved, it is entirely reasonable for students and families to want value for money. But when we examine long-term outcomes, the economic case for higher education remains strong – both to the individual and to the nation.

Between the ages of 23 and 31, average earnings for graduates rise by 72 per cent, more than double the 31 per cent increase for non-graduates with at least two A-levels. For those who were eligible for free school meals, graduate earnings growth reaches 75 per cent, compared with 26 per cent for comparable non-graduates.

In other words, higher education continues to deliver significant returns, particularly for those from less advantaged backgrounds.

A changing labour market

The current labour market, however, is undoubtedly challenging. Data from the Institute of Student Employers suggests graduate recruitment has dipped by around 15 per cent cumulatively over the last two years reflecting broader economic uncertainty. 

But labour markets move in cycles. Some employers, including firms such as PwC, are already forecasting renewed graduate hiring in the coming year as economic conditions stabilise.

More importantly, long-term economic forecasts consistently point in the same direction – the way out of our economic stagnation is more graduates. There is a body of evidence that a higher concentration of graduates in the workforce – particularly in sectors requiring high-level skills – significantly boosts productivity. The UK’s industrial strategy priority sectors all depend on an expanding pool of highly skilled graduates. Across the world, governments continue to invest heavily in higher education as a foundation of economic competitiveness. Our ambitions as a nation for economic growth are undeniably intertwined with higher education participation – something the Prime Minister recognised when setting a target for two thirds of young people to gain some form of higher-level learning.  

There is a body of evidence that a higher concentration of graduates in the workforce – particularly in sectors requiring high-level skills – significantly boosts productivity

Universities do have a responsibility to ensure graduates are in the strongest possible position to enter the labour market. Higher education must never appear detached from the realities of employment. The good news is that universities have already moved decisively in that direction.

New data from the Graduate Futures Institute shows universities across the UK and Ireland created more than 300,000 short-term work experience opportunities last year, and 350,000 students signed up to a course offering year-long placements. Partnerships between universities and employers are expanding rapidly, reflecting a shared recognition that employability must be built into the educational experience.

The world is changing rapidly, shaped by technological disruption, geopolitical instability and shifting economic conditions. In such an environment, societies need more adaptable, creative and highly skilled people, not fewer. 

Across almost every measure that matters – employment, earnings, health, civic participation and national competitiveness – the evidence remains clear.

Higher education is not a risk for the next generation. It remains one of the strongest investments individuals can make in themselves, and one of the most important investments a country can make in its future.

Vivienne Stern MB is chief executive here at Universities UK 

Martin Edmondson the CEO of the Graduate Futures Institute 

Stephen Isherwood the CEO of the Institute of Student Employers