This is an article from University World News, an online publication that covers global higher education. It is presented here under an agreement with The Chronicle.
The Chinese government's decision to scrap free tuition for postgraduate studies - including masters degrees and PhDs - is driving more graduating students to enter the job market instead of remaining in higher education. The trend is likely to intensify the graduate unemployment problem in the country this year.
Free postgraduate studies come to an end at centrally funded universities in China from the 2014 academic year that starts in September.
Despite government announcements of new financing arrangements for some students, postgraduate applications have seen a sharp drop. The changes will mean that the proportion of the record 7.27 million graduates looking for jobs will rise.
The government has also this year removed the age cap on students in postgraduate studies, which was previously limited to students under the age of 40. Even so, the total number of postgraduate applicants this year is down by 40,000 compared to 2013, based on the number of students who took the national graduate school entrance examination in January.
Postgraduate applications decline
A number of provinces have recorded their first drops in postgraduate applications for at least five years. Beijing has seen 20,000 fewer applicants compared to 2013, according to official figures released earlier this year.
Beijing institutions are already seeing more applicants for their professionally oriented graduate programmes - 38.3% of all postgraduate applicants, compared to 14.3% in 2010 - an indication that graduates are looking to enhance job prospects rather than undertake postgraduate degrees as a matter of course.
Previously enrolling for a masters degree in Beijing was a passport to coveted city residency or houkou. But unofficial announcements have suggested a new age limit for graduate students qualifying for a houkou set at 27, deterring a rush to Beijing by older postgraduate students.
In 2012, 17.5% of graduates continued their studies at a university in China and 7% went to a university abroad, according to a survey of 52,000 students nationwide by online recruitment company Zhaopin.com. This had dropped to 14.5% continuing at a Chinese university and 5.4% going abroad, in Zhaopin.com's latest annual survey carried out in April.
Tuition fees for a masters degree will be around CNY8,000 to CNY10,000 (US$1,300 to US$1,600).
The government experimented with the new postgraduate fees at a number of universities in 2007 including Peking and Tsinghua. Greater autonomy to set postgraduate fees will now be extended to all 113 centrally funded universities.
The total number of students in postgraduate education will be limited to 450,000 in a bid to maintain quality, after steep rises in numbers over the past decade led to complaints by employers about the declining quality of candidates.
Although government media has reported that a new financial aid system will be put in place, details are scant and students on China's social media site Weibo have dismissed promised scholarships as 'empty rhetoric'.
Lack of information appears to have dissuaded many poorer students from enrolling this year, according to Weibo posts.
Students may also have been dissuaded by reports that postgraduate qualifications do not necessary give candidates an advantage in the jobs market.
Education ministry statistics in 2012, which dictated the current rule changes, showed that the employment rate of postgraduate students was lower than that of graduates for several consecutive years, indicating a possible glut in the postgraduate market.
While the number of PhD students has risen, the number of research jobs has stagnated. In many cases, because of the government's various world-class university initiatives, top universities prefer to recruit academics with PhDs from highly ranked universities overseas than from local universities, further reducing the number of quality jobs for postgraduates.
Anecdotal evidence suggests that employers believe postgraduates demand unrealistically high salaries.
According to the Chinese College Graduates' Employment Annual Report, the average monthly wage of a postgraduate's first job was CNY4,500 (US$720) in 2012, while more than 52% of respondents expected it to be at least CNY6,000, said a recent survey published on the education portal eol.cn.