Britain’s graduates entering the working world for the first time this year are facing a massive bill of £378m just to get themselves through the office door – that’s nearly £2,000 per graduate, according to a new report.
Britain’s graduates entering the working world for the first time this year are facing a massive bill of Ł378m just to get themselves through the office door – that’s nearly Ł2,000 per graduate, according to a new report.
And when they start work graduates are in for a further financial shock as there is an average 30% gap between what they expected to earn when they graduated and what they’ll actually get.
The study by Norwich Union of more than 500 university and college leavers reveals that they will spend around Ł230 on clothes and accessories; Ł50 on books and equipment; Ł1,500 on a car and Ł24 on grooming just to get them to their first day at work.
With the average starting salary at Ł16,000*, graduates have a disposable monthly income of just over Ł1,000, although nearly a quarter admit that their basic outgoing expenditure is more than their monthly wage.
The research also revealed that three-quarters of graduates leave college with a student loan, with the average debt standing at Ł13,000** which is more than many will take home in their first year’s salary. Nearly half of these people are also saddled with an overdraft with their bank.
James Evans, Norwich Union says: "The figures will make sombre reading for graduates returning to college for their final term after the Easter holidays. The fact is many graduates will probably have to borrow more money just to get them to the office door on their first day. Many will also be weighed down with student loan debt and a bank overdraft that at some point will have to be repaid.
"While a good degree and landing a first job are great achievements students need to be more realistic about their initial earnings potential and should not get carried away with spending when they start to get their pay cheques."
Other findings from the Norwich Union report include:
- The average monthly out-going for most graduates is Ł793
- Graduates in their first year pump more than Ł2.4bn into the economy
- More than a third (36%) have no money left from their salary at the end of each month
- One in five fork out Ł100 or more a month to help pay off their debts
- More than a third (36%) said they live at home and pay rent/keep to their family
- ends -
Media contacts: Stacey Haddon, Charlotte Ruddesdin or Liz Fay at QBO Bell Pottinger on 020 7861 2424.
James Evans, Lorna Wiltshire or Louise Soulsby at Norwich Union Press Office on 01904 723236 or 07788 471849.
Notes to editors:
An ISDN facility is available for studio quality interviews. Call Jo Misson, Stacey Haddon or Liz Fay on 020 7861 2424 for further information.
Calculation on the up-front bill graduates face is based on a total of 209,945 graduates in the UK (figures from Graduate Prospects survey 2001) multiplied by the average bill of items we estimate graduates need to buy to get them selves ready for their first day work.
209,945 x Ł1,801 = Ł378,110,945
Research was carried out on behalf of Norwich Union by The Survey Shop, who surveyed 515 21-25 year-olds, all of whom were first-time college leavers, during March 2004.
*Institute of Employment survey, 2003.
** NUS survey, 2004.
For all life and pensions media enquiries call 08703 66 68 73. For all other media enquiries call 08703 66 68 68.
Norwich Union is the UK’s largest insurer. It is a leading provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 70% of the company’s long-term savings business.
Norwich Union has strategic alliances with building societies and other leading UK brand names including Tesco Personal Finance and The Royal Bank of Scotland Group.
Norwich Union’s news releases are available on the Aviva plc website at www.aviva.com
Appendix:
1. One-off cost spent on getting each graduate ready for their first job
| Breakdown of items needed to get to your first job | Cost | UK cost |
|---|---|---|
| Accessories e.g: briefcase, handbag | Ł22 | Ł4.6 million |
| Books/equipment | Ł50 | Ł10.5 million |
| Grooming/hair/make-up/toiletries | Ł24 | Ł5 million |
| Car | Ł1,500 | Ł315 million |
| Clothes | Ł205 | Ł43 million |
| TOTAL | Ł1,801 | Ł378 million |
2. Cost of average monthly outgoing items
| Monthly Outgoing Items | Monthly Cost | UK cost | First Year UK cost |
|---|---|---|---|
| Accommodation | Ł224 | Ł47 million | Ł564 million |
| Clothes/shoe/accessories | Ł68 | Ł14.3 million | Ł171 million |
| Entertainment/socialising | Ł138 | Ł29 million | Ł348 million |
| Food | Ł79 | Ł16.6 million | Ł199 million |
| Grooming | Ł25 | Ł5.2 million | Ł63 million |
| Loan repayments | Ł96 | Ł20.2 million | Ł242 million |
| Phone bills | Ł35 | Ł7.3 million | Ł88 million |
| Travel | Ł82 | Ł17.2 million | Ł207 million |
| Utility bills | Ł46 | Ł9.7 million | Ł116 million |
| TOTAL | Ł793 | Ł166.5 million | Ł2 billion |