Tough time for completing and prospective students as coronavirus rocks job market and offer system
Soon-to-be university graduates have been told that forgiveness of tuition fee debt would not be an “appropriate response” to the looming coronavirus recession. At the same time, universities have been told to hold off making unconditional offers to would-be students for another two weeks.
An analysis by the Institute for Fiscal Studies revealed that this year’s graduates are likely to face a squeezed job market as the coronavirus pandemic causes “a huge economic downturn”, leading graduate employers to shut their doors. But this does not mean that the government should cut the debt owed on graduation.
According to the IFS analysis, published on 18 April, those who graduate during recessions are more likely to end up in non-graduate work than those leaving university in better years, and they are more likely to earn less or be out of work in the first few years after graduation.
Due to the expected scale of this year’s downturn, the IFS said those graduating in 2020 might have “an especially hard time” and it could take up to 10 years for their earnings to recover. Although graduate earnings fell by around 20 per cent after the financial crash between 2008 and 2013, the IFS said those graduating this year would find it even harder to secure “well-paid employment” and that a hit to their earnings could last “for a considerable period of time”.
However, the financial think tank warned that that waiving or reducing some tuition fee debt for theses graduates would not be an “appropriate response” as repayment levels are linked to salaries, and a fee reduction would therefore benefit top earners the most.
Paul Johnson, director of the IFS, said calls to offset financial troubles for recent graduates by reducing tuition fee debt were “misplaced”. “These loans are ‘income contingent’ so to the extent that earnings are lower so will repayments be lower. Forgiving part of the loans will only benefit those graduates who in any case do very well in the labour market,” he said.
Elsewhere, universities minister Michelle Donelan extended the ban on universities making unconditional offers for another two weeks. The moratorium had initially been set until 6 April but was extended to 20 April. It will now stay in place until at least 4 May.
In a letter to vice-chancellors on 18 April, Donelan said any new conditional offers to students that asked for lower grades than expected “must be in the best interests of the student and not an unconditional offer by the back door”.
“We and the Office for Students will closely monitor how the moratorium continues to be observed. If we identify that any providers have reverted to irresponsible offer-making practices that are not in the interests of students or the stability of the sector, we will take action in order to protect the interests of students,” Donelan added.
Donelan wrote to universities as the government announced A level grades, this year assigned using predicted grades, would be released on 13 August as usual.