The English regulator should introduce an earnings metric as a further way of measuring graduate outcomes, the Institute for Fiscal Studies (IFS) has concluded after conducting a review for the government.
The influential thinktank judged that, on balance, looking at the salaries of graduates up to five years post-study would capture data on how well degrees prepare students for the workforce that is being missed by the Office for Students’ current focus on continuation, completion and progression.
Considering what such a metric might look like, the says it should be based on the highest earnings of graduates three to five years after graduation, and that it be pooled across two or three cohorts.
Any metric should “crucially” control for “prior attainment and various demographic characteristics as well as subject studied”, the IFS says, which would bring it in line with the OfS’ current approach.
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Unlike the current progression metric, however, the IFS says an earnings metric should “use the difference from an institution-specific benchmark as the headline measure, targeting the causal effect of a course on graduates’ earnings relative to other courses in the same subject area”.
Location of graduates when they are earning should not be considered, the IFS says, but further information, “such as the share of graduates staying in the same local area as the provider or the share moving to London”, could be published separately.
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Those whose earnings were very low – below ?3,000 in all years – should be excluded but data on how many graduates had been left out?because of this reason should be published alongside the main estimates for each course for “transparency”.
Whether the recommendation ever comes to fruition will depend on the response of the current government, but the circumstances around the publication of the report may indicate it is not a priority.
The IFS was commissioned to do the analysis in September 2023 by the then Conservative government, which designed the current regulatory framework, and was known for its?focus on degree quality, with the idea that universities were not preparing graduates well for work?– a key theme of the administration.
Labour has rejected previous attempts to get the review, which was completed some time ago, released and it was eventually published on 29 May
While graduate outcomes have generally been less of a priority for the current education secretary Bridget Phillipson, she did recently threaten to publish a league table of institutions where executive pay does not correlate to graduates progressing into good jobs or further study.
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The OfS’ conditions of registration for student outcomes – collectively known as B3 – have been controversial since their inception and any attempt to add more measures would likely be resisted by universities.
Any university falling below set thresholds can be investigated by the regulator, fined and potentially suspended or deregistered.
As part of its analysis, the IFS modelled graduate earnings at a single university – described as “large and moderately selective”.
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Focusing on full-time undergraduate degrees, it shows earnings were lowest for creative arts graduates at just above ?20,000 and highest for medicine graduates at around ?55,000 on average.
A similar exercise for all history courses across universities found actual earnings varied between an average of ?20,000 and ?40,000.
Ultimately the IFS says an earnings metric can “measure labour market success somewhat later in graduates’ careers, when outcomes will likely be more predictive of lifetime outcomes”.
“While the benefits of adopting an earnings metric need to be weighed against some drawbacks, on balance we think the advantages predominate,” the IFS analysis says.
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“In our view, appropriate contextualisation of the result can largely avoid negative effects such as incentivising an undue focus on labour market skills at the expense of other aspects of course quality, or penalising providers for enabling graduates to obtain jobs in their chosen field where these are lower paid.”
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