- A government-commissioned study found one in four graduates lose money over their lifetime after taxes and student loan repayments.
- Graduates still earn around 40 per cent more on average, but returns vary sharply depending on the subject studied.
- The findings have renewed questions over the value of some university degrees in the UK.
A government-commissioned report on graduate earnings has found that one in four UK graduates are financially worse off for having gone to university, raising fresh questions about the long-term value of some degrees.
The research, carried out by the Institute for Fiscal Studies (IFS) for the Department for Education, found that while university generally boosts lifetime earnings, not every graduate sees a financial gain. Once student loan repayments, higher taxes and the cost of studying are taken into account, around 25 per cent of graduates end up earning less over their lifetime than they might have without a degree.
The findings are based on pupils who sat their GCSEs in 2002 and compare those who attended university with others who had similar academic prospects but chose not to pursue higher education.
A degree pays off – but not for everyone
The report estimates that graduates earn around 40 per cent more over their working lives than non-graduates, equivalent to roughly £320,000 in today's money. However, researchers found that about half of that difference is explained by factors such as family background and school performance rather than the degree itself.
After accounting for those factors, the average financial benefit of attending university falls to around £180,000. Once higher taxes and student loan repayments are deducted, graduates are left with an estimated lifetime gain of about £100,000.
Returns, however, vary significantly by subject. Graduates in medicine and economics are expected to take home more than £400,000 extra over their lifetime compared with similar people who did not attend university.
At the other end of the scale, some courses offer much weaker financial returns. According to the report, the average performing arts graduate could end up around £60,000 worse off financially over their lifetime. Overall, one in ten male graduates are expected to lose more than £90,000 by going to university, while around 40 per cent of men with lower prior academic attainment are also estimated to be financially worse off.
Ministers urge students to choose carefully
The findings come as debate continues over student debt, graduate salaries and whether all university courses provide value for money.
Skills Minister Jacqui Smith said university can still be life-changing but warned that not every course delivers the same outcome. She reportedly said that too many poor-quality and franchised courses leave students disappointed, adding that prospective students should "choose carefully" and not see university as the default option.
Natan Ornadel, one of the report's authors, said the research shows university remains financially worthwhile for most students, even after considering tuition costs, taxes and loan repayments. However, he reportedly added that around one in four graduates still end up financially worse off than if they had not attended university.
Kate Ogden, senior research economist at the IFS and co-author of the report, reportedly said the findings could help prospective students make more informed decisions about whether, where and what to study. She also cautioned that future returns may be shaped by changes in the labour market, including the growing impact of artificial intelligence, although previous economic shocks such as the 2008 financial crisis did not significantly weaken the long-term financial value of higher education.
The report also found that, under the current tax and student loan system, around six in ten university degrees generate a positive financial return for the government, while the remaining four in ten do not.
Jaskirat SinghAgencies
