• George Callaghan

Going to Uni?

Going to Uni – is it worth it?

1986. The sheets were stiff with frost as I got out of bed, opened the valve, and pressed the ignition to light the Calor Gas stove. As usual it took three or four clunks to spark into life and then the first flames flickered across the ceramic plates. Open the curtains, back to bed and watch as the ice on the inside of the window began to melt.

Such was life for most of my fellow students studying Economics at Strathclyde University in the 1980’s. There were no tuition fees, most students received grants and the culture was one of low spending. Meals were usually simple, lunch in the Uni refectory and fancy meals out saved for (very occasional) special occasions.

Of course, not every student lived like this. Some had family money which subsidised cars, foreign holidays, and expensive clothes. Others took on paid employment. But the habit was low spending. Dipping into overdrafts from time to time, but not by much and not too often.

Contrast that with the 2020’s where the introduction of tuition fees and maintenance loans has meant it is completely normal to be in debt. Social change and the intensification of the consumer culture means students (like many others) pay for instant gratification through services such as Uber and Deliveroo. There are also a lot more students, with proportionate numbers increasing from around 15% of young people in Higher Education in the 1980’s (Mayhew et al, 2004) to 50.2% in 2017/18 (Dept for Education, 2019).

This culture of debt is part of a shift to a more market orientated society. Individuals have more choice - and more responsibility – for outcomes. Within higher education this has meant an increasing focus on value for money.

As an academic Professor who is both passionate about education and about keeping personal spending under conscious control, this presents a dilemma. How to best balance the benefits and costs of Higher Education?

Looking first at benefits

One of the immediately complicating factors is that benefits are both monetary and non-monetary. For example, university education potentially allows access to the wisdom of countless generations of thinkers. This invites individuals to develop insights in how they might live their lives. It also encourages a mindset which critically engages with opportunities, gathers, and analyses data, generates new ideas and produces novel contributions to work and life. These individual benefits collectively compound to produce a more rounded society, opening options for citizens to creatively contribute to improving collective wellbeing (Nikoleav, 2018). So, one important benefit of higher education is that it provides purpose and lifts the level at which individuals interact with each other and broader society.

There are also clear financial benefits both to the individual and broader society. In terms of individual benefits, Britton et al (2020) write:

"Going to university is a very good investment for most students. Over their working lives, men will be £130,000 better off on average by going to university after taxes, student loan repayments and foregone earnings are taken into account. For women, this figure is £100,000."

While on average there are positive returns from higher education, there are substantial differences by subject. As the chart below illustrates, for both men and women subjects such as Medicine, Economics and Maths produce the highest average earnings half a decade after graduation. This contrasts with creative arts, communications studies, and social care (Belfield et al, 2018):

Then the costs

What about the cost side of the equation? For individuals the most immediate are tuition fees and living (or maintenance) expenses. Looking first at tuition fees, while each UK nation have different policies the most populous country, England, had an average tuition fee in 2022 of £9,250 per year (Institute for Fiscal Studies, 2021). On top of this maintenance loans (means tested against parental income) are available. This system of fees and loans has led to average debt of £45,000 in England (House of Commons library, 2022).

Interest is charged on these loans, with repayments beginning once graduates earn above a certain threshold (£27,295 in 2022). Loans are repaid at a rate of 9% of salary above this amount. There is currently a 40 year limit on repayments, and it is estimated that 70% of students will repay their loans before the remaining debt is cancelled at the end of this period (Institute for Fiscal Studies, 2022).

One point it is worth reflecting upon is the extent to which student loans normalise debt. The system encourages students to become familiar with taking out debt and making repayments over many years. Such individuals might think “if it is OK to be in debt for studying, why not a large mortgage, car loan and so on?” Clearly, the earlier this starts the greater the opportunity for long-term debt to be an established part of a household balance sheet. And money used to repay debt cannot be invested or saved.

Taking action

Despite these costs the data does show that, on balance, University study provides a financial return – and increases wellbeing. So, what practical steps can a prospective students (and often their parents) do to minimise financial costs?

On the fees side, the answer is not too much. In England most Universities have responded to the “freedom” to set variable fees by…. setting the same fee. It might well be the case that Universities fear cheap fees being interpreted by perspective students as lower quality. There is then security in numbers with most institutions charging the same amount.

What students can control is spending. Accommodation, for example, is now big business for universities, with one estimate that UK student accommodation has a market value of £50 billion – that is fifty thousand million (Knight Frank, 2019). This is one area savings can be made. Students might decide to live at home and commute to a local University. While this might well bring other tensions into play, from a purely monetary point of view, it is likely to be cheaper. The next best option might be to look for modest rent and share a flat/house. Some wealthier parents may even take out a second mortgage with the aim of subsidising accommodation and possible benefiting from rent and capital growth.

According to student help website save the student, after rent most is spent on groceries, going out and takeaways/eating out (Save the student, 2021). Students could look to save in each of these categories by sharing costs with flat or housemates, bulk buying, cooking in instead of ordering food in or eating out. Socialising might well be another consideration – here students might set a weekly/monthly spending limit. Next up is transport. For those looking to live frugally this might mean cycling and walking instead of private car or taxi.

Another strategy for all spending is to develop a weekly “budget” and stick to it. Once students get used to this approach, they could move to a more advanced form of spending control. Rather than setting an amount aside which they use for spending, they start from a position of zero spending – and then only buy what is immediately necessary.

What about on the revenue side of the household budget? Some form of paid employment may be suitable. And the rate of return on paid employment might be higher than the hourly rate. This is because every pound earned means one less pound borrowed – and therefore one less pound on which the graduate would be paying interest. So, £1.00 earned might be worth £1.05 (or more depending on how interest compounds) of borrowed money.

By developing their frugality fitness, students will be learning a lesson that might be more valuable than the higher earning associated with their degree. For if the habit of low spending continues after graduation into paid employment there will be monthly surpluses between earning and spending. These funds can be used to feed into investments which will increase freedom and choice for their future selves.

Returning to sparking up that Calor gas stove in a Glasgow flat share all those years ago. So much has changed – internet revolution, enormous increase in societal wealth, greying hair – and yet so much has remained the same. Most importantly the recognition that money is not everything, that living within one’s means has a lot going for it and that each of us has the potential to control spending. By developing positive money habits, we can respond rather than react to money choices. It is possible to follow a passion, develop a purpose and build financial security.

If you want to follow any of this up, please drop me an email.

Professor George Callaghan



Belfield et al, (2018). ‘Returns to Higher Education using admin data: report summary’, Institute of Fiscal Studies,

https://ifs.org.uk/uploads/publications/research%20summaries/Graduate%20earnings%20summary.pdf Accessed 12/4/22.

Britton, J. Dearden, L., van der Erve, L. and Waltmann, B. (2020) ‘The impact of undergraduate degrees on lifetime earnings’, Dept for Education, and Institute of Fiscal Studies, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/869263/The_impact_of_undergraduate_degrees_on_lifetime_earnings_research_report_ifs_dfe.pdf, accessed 11/4/22.

Department for Education (2019). ‘Participation rates in Higher Education’, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/843542/Publication_HEIPR1718.pdfaccessed 16/3/22

House of Commons library (2022). ‘Student loan statistics’, https://commonslibrary.parliament.uk/research-briefings/sn01079/, accessed 1/6/22.

Institute for Fiscal Studies (2021) ‘Education Spending - higher education’, https://ifs.org.uk/education-spending/higher-education, accessed 27/5/22.

Institute for Fiscal Studies (2022) ‘Sweeping changes to student loans to hit tomorrow’s lower-earing graduates’, https://ifs.org.uk/publications/15953, accessed 2/6/22.

Mayhew, K., Deer, C. and Dua, M. (2004). ‘The move to mass higher education in the UK: many questions and some answers’, Oxford Review of Education, 30, 1.

Nikolaev, B. (2018) ‘Does Higher Education Increase Hedonic and Eudaimonic Happiness?” Journal of Happiness Studies, 19, 4, 1-22.

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