Is it worth doing a degree? (2018 update)

U.K. universities typically charge £9250 year for most Higher Education degree courses, which means a total cost of £27 750 for a standard, three year degree. But is it worth it?

This post summarises the findings of a recent quantitative study conduct by the Department for Education and the Institute for Fiscal studies which examines the impact of having a degree on early career salaries (up until 29 years old), taking into account a whole range of background factors such as prior attainment at GCSE, social class background, and gender as well as the type of university and subject studied.

This is necessarily a brief summary, reporting only some of the findings, but you can read the full report here.

What is the impact of going to university on future earnings?

Overall, at age 29 the average woman who attended HE earns > 50% more than the average woman (with five A*-C GCSEs) who did not. 

HE compared non HE earnings women.png

For men the gap is 25%, which is still significant.

Class background and prior attainment still explain more than HALF the difference

HOWEVER, a lot of the above difference in future earnings is explained by differences prior to university – and once we take into account higher prior attainment and class background,

earnings social class.png

There’s actually quite a difference here between men and women – female graduates earn 28% more than non-graduates, while male graduates earn only 8% more. So class background seems to affect men more than women?!? It sees that factors such as cultural capital may still matter! 

Russel Group graduates do a lot better!

The type of institution has a large affect on future salary gains – those attending Russel Group universities can look forward to much higher salaries compared to those attending post 1992 institutions.

graduate earnings by university.png

Overall, significant salary gains are enjoyed by 85% of students (99% of women, 67% of men)

Subject studied matters!

Future incomes vary greatly by subject studied. Men studying creative arts, English or philosophy actually end up with lower earnings on average at age 29 than those who did not go to university. However, studying medicine or economics increases male earnings by more than 20%.

earnings GCSEs men.png

For women, there are no subjects that have negative returns, and studying economics/ medicine increases their earnings age 29 by around 60%.

earnings GCSEs women.png

Final thoughts

Looked at from a purely financial perspective, in 2018 it still makes financial sense for most people to do a degree, but some gain more out their degrees than others.

But there are some quite complex correlations between future earnings, subject studied, gender, and so on, and the final two graphics above do an excellent job of showing how these variables interact.

Based purely on the stats, if you’re a lad with ‘low GCSE’ attainment going to a bottom-end university, it’s probably not worth you doing a degree.

For most other graduates, earning 20% more, that’s £6K extra on a £30K salary, roughly, so after tax, your degree would have more or less paid for itself by your late 20s, early 30s. Sooner, if you’re doing economics or medicine!

Having said that, there are other benefits to going to university besides widening your job prospects and improving your future salary – such as the knowledge, the friends and the lolz, and of course these might well be priceless.

And Very Finally a word of the advice for the uncertain….

If you’re not sure whether you should do a degree or not, or if you’re uncertain about what subject you should do, don’t let your parents or your college pressurise you into applying to university NOW. You can always apply with a ‘gap year’, or just not apply and apply next year or the year after… starting on the wrong course and dropping out is a very expensive (£9.25K) mistake to make, and you’ll probably gain little from it other than stress.

So if you’re uncertain, just chilax, even if the people around you are going mental at you about applying. I took a year out after my A-levels, and had a great time being unemployed and reading philosophy before applying for my degree in American Studies and Anthropology – two great subjects I never would have applied for while at school.

This post was written for educational purposes. And the above advice does not actually constitute advice, ask a so called professional if yer uncertain about yer future. 

Sources 

(1) https://www.gov.uk/student-finance/new-fulltime-students

(2) All images from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759278/The_impact_of_undergraduate_degrees_on_early-career_earnings.pdf

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