Is An Apprenticeship Right For You?
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With news that university loan debts have soared to over £100 billion, many students are considering apprenticeships in lieu of a traditional university degree. Currently, the UK government is strongly supporting apprenticeships, with a recent levy coming into force in April, 2017, requiring all public and private sector employers with an annual bill of £3 million or more to invest in apprenticeship training. In May 2017, arrangements were also made to give employers a bigger say regarding funding for apprenticeships.
The issue of whether or not to opt for three or four years at university, during which students accrue debt but also possibly set the path towards a higher salary, or go for an apprenticeship which will enable them to obtain a full bachelor’s qualification at no cost, is a conundrum for many. In this post, we present the relevant statistics and discuss considerations that can sway students towards one direction or another.
Important Facts and Figures
According to research carried out by OPPS, around 58.8% of university graduates are not actually working in graduate roles; in comparison, countries like Germany, with a reputation for offering quality vocational training, only 10% or less are in non-graduate roles. Data also indicates that UK graduates have lower literacy and numeracy skills than similar nations, as reported by the OECD.
Degrees and the State of Debt
The Financial Times recently reported that around two-thirds of UK students will never pay off their student loans. In part, the problem is the rise in fees. Graduates paying up to £9,000 a year are still estimated to owe around £44,000, which is almost £28,000 more than those owed by graduates five years previously.
The Institute for Fiscal Studies notes that around 70% of students are likely to never finish repaying their loans, in stark contrast to the situation in years past. Of the batch who graduated in 2002, for instance, 44% managed to completely pay off their loans in just 13 years.
According to Peter Cheese, Chief Executive of the CIPD, the situation is unsustainable, since many graduates simply won’t earn enough during their lifetime to pay student loans.
Of course, payment is possible with the right financial support. Many students are using debt refinancing services, which help them meet their monthly obligations and settle their debts earlier than they otherwise could. Ultimately, success depends on discipline when it comes to sticking to financial plans, and on leaving bigger purchases and financial obligations for after student debt is paid.
Student Debt: The Effect on Home Ownership
Getting a mortgage can be difficult for those with student debts, since lenders carry out assiduous affordability checks, looking at free income after loan repayments are reduced. Unpaid loans are not written off until 30 years have passed; meanwhile, any amount earned over £21,000 carries a 9% payment liability on any amounts above this threshold. The statistics speak clearly: the number of young homeowners has declined dramatically over the past decade as real estate prices rise and salaries remain stagnant.
Positive Reports from Apprenticeship Graduates
Research shows that almost 90% of apprentice graduates are satisfied with their experience, citing improved career prospects and abilities at performing their job, as reasons for their satisfaction. When it comes to apprenticeships, the higher the level obtained, the better. Those with degree level qualifications can earn £150,000 more on average over their lifetime than those with level three vocational qualifications.
Is University Always the Best Route?
In general, working graduates earned around £10,000 more than non-graduates, with the difference rising to half a million pounds over a lifetime. However, university degrees are not necessarily the way to go. One important study by the Sutton Trust found that people who graduate with a level five apprenticeship (which is equivalent to a foundation degree) were estimated to earn over £50,000 more over their lifetime than those who had obtained degrees from non-elite universities.
Another attractive feature of apprenticeships is the fact that they are loan-free; the idea of starting one’s career without a debt worth tens of thousands, is appealing to many. Variety in apprenticeships, meanwhile, mean that university isn’t the sole venue for working in careers such as law or engineering.
Of course, obtaining an apprenticeships at large companies can be tough; big firms in the UK such as PwC, KPMG, GSK are offering more apprenticeships than in the past, but many report receiving around 100 applications for every post.
When deciding whether or not an apprenticeship or degree is right for you, look into the demand for your chosen profession, the amount you would owe if you took out a loan, and interesting apprenticeships being offered near you. You might wish to apply to a top firm and be lucky enough to get it, but if you are after a traditional education and the experience of student life, and you are fortunate enough to make it into an elite university, a full-time degree at university might still be your perfect match.
Chrissy Hatfield, Freelance Writer and Editor
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