22 SES 09 D, Student wages, loans and employment
The past decades have seen significant growth in second-cycle enrolments in most higher education systems (Morgan, 2014 Posselt & Grodsky, 2017 Wakeling, forthcoming). Researchers have expressed concern that gains in access and participation in first-cycle higher education will be annulled by increasing inequalities in access to second-cycle ‘higher’ degrees, such as postgraduate master’s. There is evidence to suggest such a pattern in different countries (Argentin and Triventi, 2011; Neugebauer et al., 2016; Wakeling and Laurison, 2017). The proliferation of second-cycle degrees following the wide adoption of the Bologna ‘LMD’ 3+2+2 three-cycle model of higher education qualifications makes this more likely.
One aspect of access to master’s degrees is the funding available to students. In some countries, while first-cycle degrees have significant public funding support, this is not the case at master’s level (OECD, 2015). We focus here on the case of England, where there has historically been little direct public funding of master’s students. In 2012/13, for example, 72% of full-time UK-domiciled master’s students were self-funded (UUK, 2014). After the introduction of significantly higher annual tuition fees for first-degree study in England of £9,000 (≈€10,500) from 2012, commentators suggested that the resultant accumulated debt would (further) deter poorer students from postgraduate study (e.g. NUS, 2012; UUK, 2014). In response to this issue, in 2016/17 the UK government introduced loans for master’s degree study of up to £10,000.
In this presentation, we will investigate the effect of the new master’s degree loans on postgraduate participation. We look at whether overall rates of master’s degree enrolment increased after the introduction of the loans; whether this changed gaps between different groups of graduates; and whether there were any other interesting changes in participation patterns.
We test four hypotheses about the effect of the new policy. First, we hypothesise that graduates will engage in a rational economic calculation regarding the costs and benefits of master’s study. Since evidence suggests labour market rewards for master’s graduates over and above first-cycle graduates (OECD, 2015), we expect to see increased overall enrolment rates following introduction of the loans, which effectively lower the upfront cost of participation and represent a rational investment.
Second, we predict there is latent demand for master’s study among groups which have previously been underrepresented, especially those from lower socio-economic class backgrounds. Evidence has suggested that those from backgrounds traditionally underrepresented among higher education students have higher aspiration to enrol at master’s level, but lower likelihood of actually doing so (HEFCE, 2013). We would expect therefore to see enrolment rates for lower socio-economic groups to increase more rapidly than other groups after introduction of master’s degree loans.
Third, in the face of an uncertain graduate labour market, it is possible that graduates will choose to re-enrol in higher education rather than face unemployment or underemployment. If this were the case, we would expect any increase in master’s enrolment to partially displace unemployment and/or unemployment as a graduate outcome. Alternatively, the availability of master’s degree loans may enable inertia or procrastination among graduates: it becomes easier to defer full entry into the labour market by re-enrolling in higher education. Here, we would anticipate greater numbers of graduates remaining in the same institution for their master’s degree.
Finally, we hypothesise that graduates may use the new loans in order to ‘repair’ any perceived deficiency in their first degree. This would involve ‘trading up’ from a lower to higher status university between levels, and/or a greater proportion of graduates with a lower mark enrolling at master’s level than before the introduction of loans.
We utilise a very large administrative dataset containing records of all English-domiciled first-degree graduates in academic years 2012/13 - 2016/17 (N=1,361,003). The data includes a wide range of variables about the graduates and their first-degree qualifications, such as age, gender, socio-economic background, ethnicity, field of study, first-degree institution and attainment. This data is linked to each graduate’s response to the ‘Destination of Leavers from Higher Education’ (DLHE) survey, which asks about their activity approximately six months after the completion of their studies. The survey has a very high response rate of around 85%, and we have weighted the data to adjust for the small proportion of non-respondents. DLHE identifies the main activity of each graduate, such as whether they entered employment, of what kind; whether they entered further study, at which institution and what kind of study it was; or whether they were unemployed. While the data is right-censored, in that it cannot tell us about graduates who entered master’s degree study after a delay, nevertheless it gives very comprehensive coverage of our population of interest and allows for a time-series comparison of those graduating in each of the years 2013 -2017 (three years before the loans and two years after). Through bivariate and multivariate analyses, we examine the factors associated with progression to a master’s degree, focusing particularly on change over time, in order to test our four hypotheses.
Our findings indicate support for some, but not all of our hypotheses. Initial findings indicate that the introduction of master’s loans was associated with an overall increase in enrolments, from a progression rate to taught master’s of 5.8% among 2012/13 graduates, to 10.0% in 2016/17. Our analysis suggests that the master’s loans have allowed hitherto underrepresented socio-economic groups to catch up with the social classes which have traditionally dominated postgraduate enrolments. In 2012/13, 6.8% of graduates coming from managerial and professional backgrounds –as measured by the National Statistics Socio-economic Classification – progressed to a taught master’s degree, 1.4 percent points higher than graduates from intermediate backgrounds (5.4%) and 2.1 percent points higher than those from routine backgrounds (4.7%). In 2016/17, progression rates had increased for all groups: 10.5% for graduates from managerial and professional backgrounds, 10.0% for those from intermediate backgrounds and 9.5% for those from routine backgrounds. We find more limited support for the prediction that increased master’s enrolment will displace unemployment. Unemployment rates among graduates decreased in the period under study; however, this reduction was more gradual than the increase in progression to postgraduate study rates. We detect an increase in the number of master’s students staying in their first-degree institution, suggesting that the master’s loan policy may have facilitated procrastination among graduates. There is also little strong indication of graduates using the new loans to ‘repair’ perceived deficiencies from their first-degrees, such as by ‘trading up’ to a higher status institution. While our evidence suggests that the new loans have been effective at expanding and widening master’s degree participation, we caution of the risk of unintended consequences. There is an element of ‘deadweight’ in the loans scheme, and suggestions that gains could soon be undone by rapid tuition fee inflation at master’s level.
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