The Institute of Fiscal Studies has published detailed research on graduate earnings compared with non-graduates. It’s based on those attending university in the mid-2000s.
According to IFS, earnings of male graduates grow strongly throughout their 30s and far outstrips that of non-graduates. Male graduates enjoy a £15k growth between 30 and 40, compared with just £5K for non-grads. Earnings growth for female graduates is considerably less at £5k, but compares with zero growth for those without degrees. Over a lifetime and after considering student loans and paying higher tax, returns are calculated at £130k for men and £100k for women (a net gain of 20%).
As the report makes clear, these are ‘averages’ and gloss over significant differences in the returns from particular subjects and from different institutions (e.g males studying medicine at a Russell compared to female humanities graduates at a ‘recruiting’ university). Taking these into consideration, IFS calculates that, compared to non-grads, 1 in 5 would have been better off financially had they not continued to HE. (At the other end of the spectrum,10% of graduates with the highest returns will on average gain more than half a million pounds.)
The higher return does not mean the jobs graduates end up in, require degrees to do them – only that more jobs have become ‘graduatised’ (you need a degree to get them) and that those who used to do them without degrees are now ‘bumped down’ into less well paid and less secure ‘precarious’ employment.
Overall, IFS estimates that the expected gain to the exchequer of individuals attending HE is around £110k per student, but these gains are driven mainly by the highest-earning graduates. It expects the exchequer to gain more than half a million pounds on average from the 10% of graduates, but to make a loss on the degrees of around 40% of men and half of women. This increases the likelihood of government exerted pressure to reduce the number of ‘less vocational’ courses at particular types of institutions. This is already happening.