Degrees continue to pay off for graduates

Blessed · March 7, 2007

Read the full text of the report here (pdf)

Rebecca Smithers

Wednesday February 7, 2007

EducationGuardian.co.uk

Graduates can expect to earn about £160,000 more over a working lifetime than those with just A-levels, says new research from the vice-chancellors' umbrella group Universities UK.

The difference is even more striking when broken down by subject, with the so-called graduate 'premium' soaring to £340,315 for those who have studied medicine or dentistry and falling to just £34,494 for those with degrees in the arts.

Graduates typically earn to up to 25% more than their peers who choose not to go to university after A-levels, says the research, which was carried out by PricewaterhouseCoopers in association with London Economics.

Despite the huge expansion of higher education in the 1990s, leading to a big increase in the number of university graduates - currently 260,000 enter the workplace every year - the graduate 'premium' has not been eroded, the report claims.

Financial benefit is greatest for men from lower socioeconomic groups or families from lower levels of income, and benefits increase as graduates get older.

Women do relatively well irrespective of their family background or circumstances. Researchers believe this may be due to the relatively low earnings of non-graduate women.

The graduate premium associated with qualification in a certain subject rises from the gross £160,061 lifetime average to £340,315 in the case of medicine and £243,730 in engineering, and falls to £51,549 for humanities and £34,494 for arts.

Significantly, the report claims that the controversial new student support funding regime involving 'top up' tuition fees which came into force at the beginning of this academic year is a better deal than the previous arrangements, because although the visible price has gone up, the real cost has gone down.

Reasons for this include the removal of the need to pay for fees upfront, the reintroduction of maintenance grants for the poorest students and the wider provision of bursaries.

Diana Warwick, the chief executive of UUK, said: "We already know that graduates in the UK enjoy one of the highest financial returns of any OECD country. This report provides evidence that despite the expansion of higher education, the graduate premium has been maintained. Higher education is still clearly a worthwhile investment for the individual.

"While we know of course that the vast majority of graduates don't measure the value of their degrees in purely economic terms, the enhanced career opportunities and employability that a degree brings in nevertheless is a key factor in deciding whether to go on to higher education."

The higher education minister, Bill Rammell, said: "This report ... confirms what we have been saying for some time now - that graduates, on average, earn more and are more likely to be in a job than those without degrees, and that higher education is likely to be the best investment a student will ever make.

"After tax, and compared to those with the equivalent of two A-levels, graduates earn, on average over their lifetime, comfortably over £100,000 more when put in today's valuation. And when you add in the tax benefits this increases to around £160,000."

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