Student finance: Paying for a brighter future

People often describe their time at university or college as the best years of their life. For most it is their first true taste of freedom as they move out of home and start to make their own decisions. But for many the "should I work or should I go?" decision often boils down to a question of money. Some would-be applicants are put off the idea of higher education when they hear horror stories about the level of debt some graduates face.

A student debt survey by Barclays last year revealed that 1998 finalists on average expected their debt at the end of the course to be pounds 4,497. It also revealed the cost of going to university has increased by 103 per cent since 1994, while graduate salaries have risen by 17 per cent.

An NUS student hardship survey this year found that 73.3 per cent of students, 71.4 per cent of graduates and 76.6 per cent of postgrads were in debt. But the debt can be paid back slowly, when you can afford it, while your degree status will, hopefully, be a meal ticket for life.

It is also worth remembering that some students are better at managing money than others, and some just simply live far beyond their means.

Obviously there will be no debt if you go straight into the workplace after school. But the latest studies show that in the long-term the incomes of those who do head off to university or college are much higher than those who don't.

The starting salaries for graduates last year were forecast at pounds 14,580 to pounds 20,000, with a few getting more than pounds 25,000, according to a survey by the Institute of Employment Studies for the Association of Graduate Recruiters. Average incomes for graduates recruited in 1994 have risen from a starting point of pounds 13,500 to about pounds 21,000.

Another reassuring fact is that hourly pay for men aged 33 with a degree is 21 per cent higher than for those with just A-levels, and is 39 per cent higher for women, according to the Institute of Fiscal Studies.

Tony Higgins, chief executive of UCAS (the Universities and Colleges Admissions Service), said: "With a higher education qualification you're likely to earn a lot more than other people - this will make a big difference to your lifestyle. By their early thirties, male graduates earn 30 per cent more and women 46 per cent more on average than those who went from sixth form into a job.

"Also, if you have a degree, your income is likely to rise more rapidly than the income of those who haven't studied in higher education. Income for graduates recruited in 1995 was 12 per cent higher on average a year later, while for all full-time adult employees income increased just 3.7 per cent over the year. With a higher education qualification your chances of being unemployed during your working life will be cut by half. Whatever subject you study, you'll generally have a wider range of career options open to you."

Some students worry that if they spend three or four years in college, all the best jobs will have gone by the time they leave. But the reality is that employers want graduates rather than people who want jobs straight after school. They see university as a way of developing, not just academically, but as a person.

A Department for Education and Employment spokesman said: "Higher education can help build the skills - problem solving, team working, communication and presentation - which employers want. Many courses also offer the chance to gain valuable work experience. You'll make new friends, have the chance to live independently, and experience a whole range of new challenges and opportunities. As a graduate, you're more likely to get a job: most jobs today require knowledge skills; less than a third involve manual skills."

Bosses also see universities and colleges as places where the future is being shaped, giving students an international perspective on many issues, and access to the latest information technology. Many employers see taking on graduates as an effective way of transferring the latest knowledge to their firm.

Students also gain a good grasp of how to deal with people from different backgrounds and national origins, plus the chance to improve language skills and spend time working or studying abroad. This can be a huge bonus to employers, especially if the firm has strong international links or is trying to break into offshore markets.

A spokeswoman for Marks & Spencer, which pays graduates starting salaries of about pounds 18,000, said: "We obviously need a rounded group of personnel with appropriate skills at different levels. But the advantages of employing graduates are that they introduce new ways of thinking and new ideas to the company."

Media studies graduate Katharine Hodges, 26, from London, said: "A student should realise that the long-term benefits of having a degree do outweigh any short-term debt. A degree can be your passport to the job you want and possible bigger pay packets in the future. As a student you also gain experience of life-skills and a wider outlook on life."