## Introduction
In today’s competitive job market, higher education has become a necessary stepping stone for many individuals seeking to secure a prosperous future. However, the high costs associated with university education, including tuition fees and living expenses, have raised concerns about the financial burden students face. This has led to a debate on whether pursuing a university degree is truly worth the debt. In this article, we will delve into the complex landscape of student loans in Europe, examining the fees, support systems, employment prospects, and salaries of recent graduates. By exploring these aspects, we aim to provide valuable insights that can help answer the pivotal question: Is university worth the debt?
Understanding the Varied Landscape of University Fees in Europe
When it comes to university fees, Europe presents a diverse range of systems and structures. According to the European Commission/EACEA/Eurydice’s National Student Fee and Support Systems in European Higher Education – 2020/21 report, the landscape varies significantly across countries.
In some higher education systems, full-time home students pay no fees in first-cycle programs. These countries include Denmark, Greece, Cyprus, Malta, Finland, Sweden, Turkey, and Norway, where public higher education institutions also offer education without fees.
On the other hand, in 12 higher education systems, all first-cycle students are required to pay fees. These systems include Belgium (German-speaking and Flemish communities), Luxembourg, the Netherlands, Portugal, the United Kingdom (England, Wales, and Northern Ireland), Albania, Switzerland, and Iceland.
In the remaining 23 education systems, there is a mix of students who pay fees and those who do not. Fees may vary based on education programs or fields of study. For example, in Czechia, Germany, Croatia, Poland, Slovenia, and Slovakia, full-time students typically pay only administrative charges of up to €100. In 14 other systems, annual fees range from €101 to €1,000.
Among the European countries with relatively high fees, the United Kingdom stands out. In England, undergraduate home fees are currently capped by the government at £9,250 (€10,737). The average tuition fee loan for the 2022-23 academic year was £8,230 (€9,446) in England, £8,410 (€9,653) in Wales, and £5,490 (€6,301) in Northern Ireland.
Financial Support Systems: Grants and Loans
Recognizing the financial challenges faced by students, European countries offer various forms of direct financial support. These primarily come in the form of grants and loans. Public grants are financial aids from the public budget that students do not have to pay back, while loans need to be repaid, often after graduation or upon gaining gainful employment. Publicly-subsidized loans often involve reduced interest rates, easing the financial burden.
It is worth noting that not all European higher education systems offer public grants. According to the Eurydice report, England and Iceland are the only countries without public grants. However, publicly-subsidized loans exist in around two-thirds of all European higher education systems.
Comparing the usage of grants and loans, the report reveals that grants are more commonly utilized by students. In the 2019/20 academic year, there were no publicly-subsidized loans in 13 education systems. Additionally, the proportion of loan beneficiaries was less than 5% in seven systems and below 15% in six countries. Turkey had the highest proportion of loan beneficiaries, with one in five students, followed by Iceland, where it was one in three.
Among European countries, the United Kingdom, Nordic countries, and the Netherlands had the highest share of loan beneficiaries. In England, Wales, and Northern Ireland, more than 94% of home students at universities benefited from publicly-subsidized loans. Scotland, on the other hand, had a proportion of 69%. Norway, Sweden, the Netherlands, and Finland also had significant numbers of students benefiting from such loans, with percentages ranging from 49% to 66%.
The Rising Debt Burden and its Impact
While the availability of student loans provides financial assistance to many aspiring university students, it also leads to a growing debt burden. In England, for example, the average debt on graduation for the 2023 cohort was approximately £47,000 (€54,124) according to the House of Commons Library Research Briefing. This debt was significantly higher compared to the rest of the UK, with Wales at £35,800 (€41,141), Northern Ireland at £24,500 (€28,155), and Scotland at £15,400 (€17,968).
When examining the average student debt on graduation in European countries, England stands out with the highest figures. According to the OECD, the average student debt in England for the academic year 2019/20 was €51,367. In comparison, the average student debt in Norway was €27,491, Denmark €14,907, and Finland €14,807. The Netherlands recorded an average student debt of €16,227 in the 2017/18 academic year.
Interestingly, the OECD report found a correlation between high tuition fees and high levels of student debt at graduation. However, even in countries with low or no tuition fees, such as the Nordic countries, the debt burden can still be high due to the high cost of living.
The student loan debt in England has reached staggering levels, with approximately £20 billion (€23 billion) loaned to around 1.5 million higher education students each year. By the end of the 2022-23 academic year, the total publicly-owned debt for English higher education students and EU students studying in England surpassed £205.6 billion (€236.3 billion). This marked a significant increase from the £50 million debt at the end of 2013-14 and over £100 billion at the end of 2017-18. Based on research briefings, outstanding student loan debts are projected to peak at £460 billion in the mid-2040s.
Repayment of Student Loans and Employment Prospects
One critical aspect to consider when evaluating the worth of a university degree is the employment prospects for recent graduates. Eurostat data reveals that in 2022, 86.7% of higher education graduates aged 18-34 in the EU were employed, compared to 74.2% of medium-level graduates. This demonstrates that a university degree can significantly enhance one’s chances of finding employment.
The employment gap between tertiary graduates and upper/post-secondary graduates in the EU was 12.5 percentage points. This suggests that having a university degree indeed contributes to job acquisition. With the exception of Iceland, the employment rate of tertiary graduates was consistently higher than that of upper/post-secondary graduates in all countries.
The size of the employment gap varied widely between countries, ranging from -0.8 percentage points in Iceland to 31.2 percentage points in Romania. Nine countries, mostly in the Balkan or Eastern European regions, had gaps above 20 percentage points. France and Spain also recorded an 18 percentage point gap. In the United Kingdom, the difference was 8.7 percentage points in 2018.
However, it’s not just employment prospects that make a university degree valuable. University graduates also tend to earn higher salaries. The earning gap between university graduates and non-graduates varies across Europe. In 2022, the median equivalized net income for full-time workers aged 16-64 with a university degree was €26,304, while it was €18,876 for those with a medium level of education.
The ratios of high education level to medium level in median equivalized net income provide further insights into the role of education in salaries across countries. In 2018, this ratio ranged from 1.08 in Norway to 1.69 in Romania, with the EU average being 1.39. Nordic countries, including Norway, Denmark, and Sweden, had the lowest ratios, indicating that education level had less impact on salaries compared to other countries. The United Kingdom had a ratio of 1.33, indicating a notable earning gap between university graduates and those with a medium level of education.
It’s worth noting that while the earning gap is generally lower in Nordic countries and the Netherlands, it still exists. Denmark and Norway had a ratio of 1.27, followed by the Netherlands at 1.33 and Finland at 1.39. The United Kingdom had a ratio of 1.58 when comparing high and low education levels.
Conclusion
The question of whether going to university is worth the debt is a complex one, with multiple factors to consider. The landscape of student loans in Europe varies significantly, with different countries adopting diverse fee structures and providing various forms of financial support. The debt burden on graduation can be substantial, particularly in countries with high tuition fees such as England. However, a university degree also offers improved employment prospects and higher salaries, as demonstrated by the employment and income data for recent graduates.
Ultimately, the decision to pursue a university education and take on the associated debt should be based on careful consideration of personal circumstances, career aspirations, and the value placed on education. By understanding the nuances of student loans in Europe and examining the employment and income outcomes, individuals can make informed choices about whether university is worth the debt.