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Students who choose to learn more, earn more

Graduates in England typically earn more through their lifetime compared to those who could have continued in education but chose employment instead, new analysis of government data has found.

The analysis by Universities UK of data that tracks earnings from the age of 17 to 31 shows most graduates rapidly catch-up with and overtake non-graduates, despite having fewer years in the labour market, and this difference is sustained throughout their careers. The salary difference increases throughout their careers, even after the costs of studying – and higher taxes – are factored in. Graduates earn more than non-graduates across all regions of the country, where our universities are located. This regional perspective helps take into account local labour markets.

Crucially, these differences are not reflected in the government’s metrics for assessing course success. Currently, the measures used by the Office for Students only go up to 15 months after graduation – therefore not taking future progression into account.

Welcoming the new analysis, Vivienne Stern MBE, Chief Executive of Universities UK said:

This new analysis shows choosing a degree really does pay off for most graduates, and that if you learn more, you are likely to earn more throughout your working life. With the potential to significantly increase earnings wherever you live or sector you work in – including the arts and media – this data clearly demonstrates that salary growth for graduates is a marathon, not a sprint.

“A university education continues to pay dividends, throughout an individual’s career. With exceptionally positive outcomes for students from less advantaged backgrounds, it is clear universities do provide an essential opportunity for individuals to reach their potential wherever you are in the country. We continue to call for an uplift in maintenance support, including grants for those who need them the most.

Vivienne Stern MBE

Chief Executive, Universities UK

The new analysis compared earnings for graduates with contemporaries who held the right qualifications to enter higher education but opted to seek employment instead. The new figures, based on government data linking student and tax records, show that on average:

  • Graduates overtake those who chose not to go university within just a few years, earning at least 20% more once they are in their mid-20s. By age 31, graduates typically earn 37% more, and the gap is slightly higher (38%) for those from economically deprived areas
  • Graduate earnings increase at a faster rate than those of non graduates Between the ages of 23 and 31 average earnings grow by 72% for graduates compared to 31% for non graduates. For those who were previously on Free School Meals average graduate earnings growth is 75% compared to 26% for non graduates.
  • Graduates aged over thirty are more likely to be in work, and far less likely to be claiming benefits, than those without a degree.
  • On average for the tax year 2020-21, graduate earnings are higher than earnings for non-graduates in all regions.

On average, earnings for graduates are higher over time regardless of socio-economic background. Graduates from a free school meals background will typically earn over a third more than non-graduates (who could have gone to university but chose not to) from the same background by the age of 31.

Again, on average, those who could have chosen university but opted to seek employment instead are more likely to be claiming out-of-work benefits by age 31. This is twice as likely in the North West (2% of graduates and 5% of non-graduates claiming out of work benefits), and up to four times as likely in some parts of the country (such as the South West, South East, East Midlands and East of England where 1% of graduates claim benefits compared to 4% of non-graduates).

Vivienne Stern continued:

Earnings are not the only measure of a valuable degree – and lots of people choose careers because they care about them, not just for the money. However, this new analysis conclusively shows that it is overwhelmingly worth getting a degree.

“Degree apprenticeships are not an alternative to higher education. Instead, degree apprenticeships are a form of higher education delivered as a partnership between employers and universities.

“The analysis also shows that the current metrics used to measure graduate success do not reflect the full value of a university degree to individuals and local areas. Measures, such as those used by the Office for Students, that look at employment outcomes 15 months after graduation, offer only an initial snapshot. This new analysis show how necessary it is to look at the longer-term impact when evaluating the ‘value’ of university degrees.

Vivienne Stern MBE

Chief Executive, Universities UK

 

 

Download graduate employment analysis