The number of graduates claiming benefits has surged to more than 700,000, with one in three claiming they are too sick to work.
Around 707,000 people with a degree were not working and living off state benefits last year, according to analysis by The Centre for Social Justice (CSJ).
The figure is a 46 per cent increase to pre-pandemic statistics with the number of graduates saying health reasons are stopping them from seeking employment more than doubling during the same period.
The think tank found degree holders citing health reasons for not working had ballooned from 117,000 in 2019 to 240,000 in 2025.
The CSJ, founded by Sir Iain Duncan Smith, says the figures expose the consequences of an education system that has been ‘obsessed’ with expanding university participation without sufficient regard to labour market demand.
Daniel Lilley, senior researcher at the CSJ, said: ‘If we are serious about repairing broken Britain, we must give young people the opportunity to succeed and fuel key industries with the domestic skills they need to grow.
‘Both will depend on ending the obsession with university and rewiring education to give technical learning the pride and place it deserves.’
Analysts found that for every three British young people opting for a university course, just one receives vocational training. By contrast, in the Netherlands this ratio is two-to-one, and in Germany one-to-one.
The number of graduates claiming benefits has surged to more than 700,000, with one in three claiming they are too sick to work
Meanwhile, under-19 apprenticeship starts have fallen by 40 per cent since 2014/15, despite CSJ analysis showing that higher level apprentices now out-earn the average degree.
Five years after qualifying, a higher level (Level 4) apprentice earns almost £12,500 more than a graduate from a low-value university course and £5,000 more than the average graduate.
The bottom quartile of graduates were found to earn £24,800 five years after completing their course, compared with £37,300 for a Level 4 apprentice.
Even lower level apprentices were found to earn as much as or more than graduates from lower-value degrees.
The CSJ estimated that half of all university students starting each year could have been financially better off taking a higher level apprenticeship instead, avoiding debt while moving directly into skilled employment.
A Government spokesman said: ‘We are determined to support young people into work and gain the skills they need to succeed.
‘Through our new Jobs Guarantee, we’re helping young people who are out of work find paid placements, with employers such as E.ON, JD Sports, Tesco and TUI having already pledged their support.
‘We’re investing £1.5bn to get hundreds of thousands of young people earning or learning – including through an expansion of apprenticeships and training.
‘We’ve also commissioned the former Health Secretary Alan Milburn to lead a review to get to the root of what’s holding the younger generation back, because we believe in tackling this complex issue with urgency.’
Last July, the first data of its kind released to Parliament found a total of 639,000 people with an honours degree or similar level qualification are claiming Universal Credit.
It meant that more than one in nine claimants (11.9 per cent) are graduates, just four per cent lower than the proportion with no qualifications (15.9 per cent), which came to 849,000 people.
The data, from the Labour Force Survey for March to May this year, has been released to Parliament by the UK Statistics Authority, as the full-time employment rate for graduates has fallen from 61 per cent to 59 per cent.
It comes as more graduates face earning the minimum wage, with the salary gap between the country’s lowest earners and students leaving university becoming increasingly closer.
The median real-terms salary for graduates aged under 65 was £26,500, the study found. This was an increase of £500 from the previous year.
The survey did find that graduates were more likely to be in work than non-graduates, with 88 per cent of graduates in employment last year, compared with 68 per cent of non-graduates.
The figures of the number of graduates on Universal Credit fuelled concerns that so-called ‘Mickey Mouse’ degrees are seeing students leave university without the skills they need to find a job.
