Graduate outcomes; employment and earnings

The UK government released employment and earning statistics over the 2018-19 tax year for graduates yesterday. The figures cover employment and earnings for English universities, FE, and other providers delivering degrees, one, three, and five years after graduation.

The headline figures:

  • Median graduate earning five years after graduation: £27,400
  • Graduates in sustained employment, further study, or both five years after graduation: 86.7%
  • Female median earning lower than male five years after graduation (gender gap in earnings): 13.4%
  • Median earnings for EU and non-EU graduates from English providers and employed in the UK: £31,000 (EU), and £32,800 (non-EU)

The average earnings for a graduate five years after completing their courses is just £4000 a year less than the national average (£31,,461) for all employees, five years into their 35+ year working life and generally earn close to the national average (£31,100) ten years after graduation. Students studying in England from outside of the UK who stay to work after graduating earn significantly more than those officially domiciled in the UK. 

Despite making up 58% of graduates, females earn substantially less than male graduates on average. This gap has grown since 2017/18 (12.5%) and 2014/15 (10.7%); however, females are slightly more likely (2.6% after one year and 0.5% after ten years) to be in sustained employment or further study than males. Graduates from the Indian, Chinese, and White and Asian mixed ethnic groups had the highest earnings one, five, and ten years after graduation.

Graduate earning data is also provided by mode of study. Those who study a Sandwich course, which includes time spent on a business or industry placement and away from the university, were more likely to be in sustained employment or further study and earned more on average than full-time students. Part-time students performed less well in this measure, with only 82.7% in work or study ten years after graduating compared to 85.2% of full-time students and 86.2% of sandwich courses graduates. Graduates of part-time courses earn more initially after graduating than full-time students, but the difference reduces over time, with graduates from full-time programmes making more after ten years. The initial differences in part-time and full-time graduate earnings can in part be explained by part-time students generally being older than students on full-time courses. 

The complete data set can be found on the UK Government website. The Institute of Fiscal Studies has produced a report on the returns on degrees, looking at differences between socio-economic group and ethnicity. Interestingly the Lifetime returns on a degree still show a significant drop, with considerable variation, from the Government stated £400,000 used to justify student loans and the 50% participation rate target. 

Our analysis shows that over the whole life cycle, university pays off on average for men and women from all socio-economic and ethnic groups. Within all groups, more than two-thirds of university students benefit financially from their degrees. However, there are substantial differences in average returns between groups.

Returns vary relatively little by socio-economic status, with only those who went to independent schools – especially men – getting substantially higher returns from their degrees. Net lifetime returns are also high for those from the lowest socio-economic backgrounds, especially for women. At the other end of the spectrum, returns for state-educated men and women near the 54 top of the socio-economic status distribution are relatively modest

The returns to undergraduate degrees, IFS

The financial return on investment of a degree

The average student from a low-income background will borrow £53,000 to attend a three-year degree at university, which rises to £28240.75 with interest if left unpaid over 30 years. The first £27,750 covers tuition fees, with the rest used for maintenance costs, including rent, food, and socialising, with four-fifths of students living away from home to study.

The graduate or professional premium is a term used to describe the increase in average wages that university graduates can expect having achieved a degree.

Students are told that going to university is an investment. The UK Government has claimed a graduate premium of an additional £400,000 of income over a lifetime. 1999 Age-earnings reported The Economic Journal showed the premium at an average of £410,000, the premium has reduced to just £100,000.

Over a 45 year working life, £100,000 is just £2,222 per year before income tax and national insurance. This increase in earnings does not cover the interest accruing on the loan. According to the Institute of Fiscal Studies, 20% of students would have been earning more ten years after graduating if they had skipped university and gone straight into work instead. 

It is important to note that the graduate premium is an average, and the return differs significantly by gender and subject area. According to the Institute of Economic Affairs, male Medical and Dentistry graduates earn an average of £400,000 more over their working lives than non-graduates. Male Creative Arts and Design graduates earn £10,000 less than non-graduates over their working lives.   

There are many reasons to go to university. Still, the financial return on your investment of delaying starting your career by three years and the £28k-£53k dept is only financially beneficial if you choose your degree specifically for that reason.