Part-time study pays dividends for students and tax payers, says OU study

Sep 16, 2018

An analysis of the earning potential for part-time students qualifying in England at the age of 37 underlines the benefits not just for the individual but also for the public purse.
Higher earnings mean a higher tax take for the UK Treasury. 
The study, commissioned by the Open University from specialist consultancy London Economics, estimates that such an increase in earnings would lead to someone in England paying £191,000 more in tax over their working life in cash terms.
The findings add strength to the argument that providing extra UK government support to part-time study in England would bring clear economic benefits far higher than the cost of study.
The Open University has called for the UK government to provide financial support to part-time students in England to reduce the cost of study and help to reverse the dramatic fall in numbers studying since the changes of 2012.  
In addition, better incentives for more flexible study through shorter courses, better information, advice and guidance for adults and support for progression through to HE at Levels 4 and 5.
OU acting vice-chancellor Mary Kellett said: “There are big potential returns for both students and taxpayers that can be unlocked by studying a part-time degree as a mature student. This research shows that supporting people to study part-time is a smart investment for the UK government to make. 
“It provides further evidence of the large costs to society of the collapse in part-time higher education in England caused by the 2012 funding reforms. The UK government needs to provide financial support to part-time students in England either through a tuition fee grant or through maintenance grants for part-time students. 
This will help deliver the skills our country needs by encouraging those already in work to ‘earn and learn’ and give real study choices to people of all ages and backgrounds.”
One option for providing financial support is to introduce maintenance grants for part-time students as is happening in Wales following recommendations from the independent Diamond Review, she added.
London Economics used the same methodology employed by the UK government to develop a sophisticated model which looked at the earning potential of two types of part-time graduate – those whose previous qualifications included two A-levels and those who had only GCSEs when they began their studies (around a third of OU degree students).
The report found that getting a part-time degree was associated with lifetime earnings on average £238,000 higher in cash terms for a man graduating at the age of 37 – the average age of an OU graduate – who began their studies with two A-levels. It was associated with lifetime earnings on average £377,000 higher in cash terms for a similar student who previously had only GCSEs.
The additional tax paid by such an increase in earnings would lead to a male graduate paying between £123,000 and £191,000 more tax over their lifetime in cash terms. 

The report concludes: “The analysis illustrates that there are substantial lifetime benefits to graduates and the Exchequer associated with Open University part-time degrees.” 

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