Tuition fees and the loss of grants can limit poor students' choice of employment, say Rick Audas and Peter Dolton.
Charging tuition fees and phasing out maintenance grants could rob people from poorer backgrounds of jobs as well as higher education.
Not only do these steps discourage poorer groups from attending university, but they introduce inequalities into the jobs market, which later can tip the scales in favour of the more able and those from wealthier backgrounds.
Our recent study of graduate migration and employment using the Higher Education Funding Council for England survey of highly qualified workers shows that those who move away to study at university tend to come from wealthier backgrounds and have the best A-level results. One of the reasons they migrate is that they can afford to do it. The survey also found that students who left home to study were more likely to travel to find work after they graduated. Introducing fees and withdrawing maintenance grants forces students to study closer to home. As our research demonstrates, it perpetuates a cycle of privilege: graduates who migrate to work earn more than those who take employment in their home region.
Fees could also lead to further polarisation of traditional and new universities, with new universities becoming the refuge of lower-achieving students and those who cannot afford to go away.
Students who stay at home to study also have to choose from a limited selection. Rather than looking at what is available nationally and selecting the course that best suits their interests, they will settle for the best locally available.
Indebted graduates tend to take the first job that allows them to start servicing loans. Often these are non-graduate jobs that add little to building a career. In the Northeast, for example, graduates are being drawn into the call-centre industry. This sort of work limits time for a proper job search, so graduates end up in dead-end jobs with high debts, unable to take steps to find better employment.
The message is clear: student debt significantly impairs the capacity of individuals to find suitable employment. The problem could be worse for ethnic minorities and those with disabilities, who are even less likely to migrate to study.
Our research shows that it is impossible to understand the migration patterns of graduates into jobs without first understanding the factors that drive the earlier decision about where to study. The effects of social class are fundamental to these decisions.
Moving away to study is also important in terms of personal development. It is a key part of developing independence and of gaining a range of experiences, helping to round the individual, boost their confidence and make them more employable. If access to these advantages is unevenly allocated to those from privileged backgrounds, they ultimately have an advantage in the job market.
A well-functioning labour market matches employees' skills with employers' needs. The more suitable this match, the greater the productivity and the higher the earnings for the individual. Studies show that one-third of graduates are working in jobs for which their degrees are unnecessary.
The Dearing report and the implementation of regional development agencies are the first steps towards regionalisation of higher education. If this leads to regional labour markets acting as obstacles to relocation,one might expect a greater proportion of the nation's human resources to be mis-allocated and for individuals to be far less likely to reach their potential.
Rick Audas is a research associate. Peter Dolton is David Dale professor of economics at the University of Newcastle upon Tyne.
* Do fees and phasing out of maintenance grants perpetuate a cycle of privilege? Join the debate at www. nexus.org/ext/soapbox or email us on soapbox@thes.co.uk