The Grattan Institute have released a new report analysing the Benefits of Higher Education, and it’s a fascinating read.
There are many lessons there for people working within Careers, particularly those who advise and guide secondary students, and we’ve looked at some of the key take-aways below:
“Some university students with low school results would be better off doing vocational education instead.”
This is the first line from their media release, and sure, there is no doubt that some students will always be better off at TAFE or studying VET subjects, than at University.
But we believe it’s important to consider what they mean by ‘better off’, and which students this statement applies to.
The report clarifies that they’re referring to ‘lower ATAR’ students, specifically those with an ATAR of 65 or less. And their definition of ‘better off’ relates directly to higher lifetime earnings, which takes into account not only income but also length of time spent in education and training, as well as time spent either unemployed or underemployed.
So, who does this report apply to?
Male students with lower range academic ability, as defined by their ATAR score.
While female students were considered, the results from the report suggest that they do better if they go on to higher education, regardless of their ATAR. We’ve gone into more detail below about how the report refers to women.
The report suggests that male students should consider alternatives to university because their potential earning capacity in male dominated vocational fields is as good, if not better than, their earning capacity with a degree. Plus, they’re less likely to face periods of under or unemployment, and are more likely to be employed in a role where they use the skills they’ve learnt in their qualification.
From a secondary school perspective, it’s clear that students (both male and female) with lower expected ATARs need to be advised appropriately about their options and prospects, and that alternatives such as vocational training or an alternative degree field are discussed.
Male students who expect a lower ATAR could consider alternatives to the popular non-specific humanities or science degrees, such as a more specific degree (like education or commerce), or a vocational qualification.
“Higher education has expanded rapidly in Australia over the past 20 years, but vocational education has flat-lined.
“This has led to concerns that students, especially lower-ATAR students, are being encouraged to enrol in higher education and to overlook potentially better-paid vocational education alternatives in fields with good job prospects.”
Not only has the higher education sector expanded rapidly, they’ve also reduced many of the barriers to entry, and it is now much easier for low or no ATAR students to get into a university degree.
More enrolments lead to more graduates, and more competition for those graduates. The lower ATAR students who would have not achieved admission in the past are now pushed to the bottom of the pile, which significantly affects graduate outcomes and lifetime earnings.
In addition, the recent skills shortages, created by the lack of growth in VET graduate numbers, have pushed earnings for VET graduates higher.
Those students with lower ATARs who just scrape into university are at the lower end of the spectrum, and face competing for jobs with students who’ve achieved ATARs of 90+, but if they entered the vocational sector they would be at the top or middle of the spectrum and competing for jobs where there is an existing skills shortage.
And the stats back this up – at 25 years old, students with VET qualifications are more likely to be a. employed full time, and b. earn more than those with university qualification.
It all depends on the course and field they choose
Competition is always the driving factor when it comes to finding a job and increasing the chance of earning a ‘good’ income.
If students with lower ATARs choose a course or field that is a. in demand, and b. not full of people with higher ATARs, they have a much better chance of doing well, whether that is at university or in VET.
Alternatively, if students with lower ATARs just want to go to university and choose a popular degree, they could find themselves facing under or unemployment, and lower lifetime earnings.
But, as we know, choosing a field the student is not interested in based on income is unlikely to lead to a successful outcome. The report considers that students can be given alternative options which still fit within their fields of interest, but could offer less risk or more opportunities.
If looking for ways to counsel students, there are some fantastic tables which compare lifetime earnings for similar fields with different qualifications, like this one:
Source: Grattan Institute – Risks and rewards (August 2019)
There are financial barriers to vocational training that may affect the decisions of students
Students attending university can access a range of financial support options, which are clear and easy to understand, plus students with low incomes can access additional support.
But vocational students can struggle to understand the available financial support, and it is restricted to certain qualifications and fields, which vary by state and also from year to year. Costs also vary between institutions, and although loans may be available they have strict eligibility criteria.
For this reason, some students may find it easier to simply apply to university with their ATAR and receive a government funded place, rather than navigating the vocational system.
This article is a collection of our thoughts, and is not endorsed by the Grattan Institute. You can read the full report and make up your own mind here.
Outcomes for girls
Female low or no ATAR university students tend to choose a range of degrees where there are low levels of unemployment (such as nursing or teaching), which means they are less likely to struggle to find a job even if they have a lower ATAR.
When it comes to expected lifetime earnings, women with an average ‘lower’ ATAR of 65 are likely to earn much more if they go to university, rather than choosing a VET qualification – a woman with a Bachelor degree is expected to earn $120,000 more than if she had a Diploma, and $200,000 more than if she had a Cert III/IV.
It’s worth noting that the report explains how women who choose higher-paid vocational fields (such as engineering) can face additional barriers such as male-dominated industries and a lack of family-friendly employment, which could make choosing one of them as an alternative to university less appealing.
Women often face higher unemployment in these vocational fields, and are less likely to see higher expected lifetime incomes based on these choices – “women Cert III/IV holders in engineering with an ATAR of 65 have expected lifetime earnings of $1.2 million, $800,000 less than for men.”
Outcomes for boys
Male students with lower ATARs often choose commerce or humanities degrees. Competition within these fields is already fierce, and if they finish their degree it can be difficult for them to find a role when there are a large number of graduates with better ATARs and better outcomes.
These fields are some of the worst for unemployment, regardless of performance. Students with Humanities degrees with an ATAR of 90+ are almost twice as likely to be under or unemployed than Education students with an ATAR of 30-59.
In contrast, under and unemployment rates for those with vocational education tend to be better, and students are more likely to be employed in jobs that were relevant to their training.
As for income, male students with an ATAR of 65 can expect to earn $30,000 more over their lifetime income with a Diploma, rather than a Bachelor degree.
Of course, this is averaged across all fields, so each individual’s choices will have a huge impact on the outcome, but at face value it would appear that male students with an ATAR of around 65 or lower should seriously consider their options.
Choosing a generic, popular course with low employment prospects as an alternative to a well-chosen VET qualification could lead to lower lifetime earnings.