IFS reports that one in five students lose money by going to university
According to The Institute for Fiscal Studies’ (IFS), one in five graduates has lower lifetime earnings than those without a degree. Blake Coe reports.
Analysing the salaries of graduates who went to university in the mid-2000s and controlling for individuals’ background and previous academic record, The impact of undergraduate degrees on lifetime earnings report finds that attending university boosts average lifetime earnings by £100,000 for women and £130,000 for men.
The headline figures do, however, mask considerable differences based on the subject studied and university attended, as well as a complicated picture on inequality between the sexes.
The best paid subjects are economics, medicine, and law, with an average “graduate premium” of £250,000. At the other end of the spectrum, arts and languages graduates are, on average, no better off than their non-graduate piers.
The choice of university is also important, but less so. The gains for women are “relatively constant across institution types,” whereas men who attend Russell Group universities are £500,000 better off than those at the least selective institutions or that have no degree.
Despite having a larger average pay off from their studies, there is far more inequality amongst male graduates. 85% of women and 75% of men “achieve positive net lifetime returns”. Men who attend the least selective institutions receive no benefit whereas women do, and men who study creative arts or languages are worse off than men without a degree. For women there is no statistically significant difference.
In terms of how this study impacts UCL students, there should be very few who do not gain financially from their studies. Amongst both men and women, anyone not studying languages or creative arts should benefit at all but the least selective universities. Women studying these subjects have on average a net zero benefit, but at a Russell Group university such as UCL at least some financial gains can be expected. For men studying these subjects at UCL the data is less clear, however, the loss amongst male students nationally is reasonably small, whereas the average gain for attending top universities is very large. At least some financial benefit can probably be assumed.
Furthermore, the claim made by the report that “one in five students – or about 70,000 every year - would actually have been better off financially had they not gone to university” may be a little hasty. It is certainly true that 20% of graduates are poorer than the average non graduate; but a further jump to suggest that this group would have gone on to earn average salaries for non-graduates had they not attended university.
Better paid non-graduate jobs such as construction and the trades don’t seem an obvious alternative for those currently studying arts and languages. The average wage for those without a degree will also be dragged up by people who took apprenticeships and others who have gone on to earn extremely well independently. It is quite possible that a considerable number of the graduates in question go on to be poorer than the average non graduate, but richer than they would be without their degree.