Radical changes to Higher Education funding will turn students and employers towards apprenticeships.
In February 2022, the Government published proposals to reform student finance in England that will see the threshold for Student Loan repayments reduced to just £25,000, and the repayment term lengthened to 40 years.
This means many will still be repaying their Student Loan as they approach retirement and will more than double repayments for many.
The new repayment threshold will not just apply to new students but existing ones. The House of Commons library estimates that lifetime loan repayments for this cohort will be substantially larger than under the current system; for teachers and nurses it estimates an additional £10-£15,000 and £15,000 more will be owed.
Whilst the student population may argue the changes are unfair, the wider tax perspective is clearly being taken into account. With a staggering 75% of loans never being repaid in full, the current system was increasingly seen by many as unsustainable. The changes being proposed by Government will see this trend largely reversed with 70% repaying their loan.
Given the debt burden already discourages many from pursuing a University education, these changes could hasten the decline in University applications in the years ahead.
Against such a backdrop, in theory, apprenticeships should become more attractive. However, the system is skewed against them, with policymakers, schools and often colleges, fixated with Higher Education.
Research from AAT published earlier this year shows that there continues to be a considerable lack of awareness about apprenticeships, numerous misconceptions about their value and that Higher Education is a route regretted by many.
The AAT research shows:
A continuing lack of awareness
- only 29% of 18-24-year-olds said that they heard about alternatives to degrees, such as apprenticeships, while at school
- most people aged 18-24 (53%) think there should be more resources available to help people learn about apprenticeships.
- 41% of 18-24-year-olds believe that apprenticeships don’t pay enough
- 34% think that apprenticeships are only available for manual labour jobs
- only 36% see apprenticeships as a good alternative to university
- 40% are aware that apprenticeships enable people to earn whilst they learn.
Higher Education doesn’t always pay
- 42% of people aged 21-45 believe their degree has not played an essential role in their careers to date
- 16% of all people with degrees wish that they had chosen a different route (this figure rose to 20% of those aged 24 and below)
- Higher Education remains a great route to employment for some but it can be an expensive option and the proposed changes will make it even less affordable for many.
Given the high numbers of graduates who either regret their degree programme or admit it hasn’t played an important role in their career, it would make sense for schools, colleges and policymakers to do much more to promote alternative routes to employment such as apprenticeships – whether in accountancy or any other subject.
Apprenticeships not only mean no debt for students but earning a salary whilst learning and getting ahead of the competition too. In fact, if financial considerations are paramount, it’s worth noting that many apprentices will earn considerably more than University graduates over their lifetimes. Food for thought for individuals but also the institutions and organisations that continue to push a University education as the supposed “gold” standard.
Phil Hall is AAT's Head of Public Affairs and Public Policy.