While men who went to university earn 25% more at age 29 than those who did not (but who had at least five good GCSEs), most of that difference can be attributed to the fact that they have better GCSE and A-level results and came from better-off families on average. Going to university in itself increased earnings at age 29 by more like 6%.
For women, the effect of attending university is much greater. By age 29, women who went to university earn 50% more than those (with at least five good GCSEs) who did not, and half of that difference can be attributed to the fact that they attended university.
Overall, 85% of students - 67% of men and 99% of women - attend an institution that on average increases earnings at age 29 compared with not going to university. But there is a huge variation in returns depending on prior qualifications, course studied and institution attended. Studying economics, medicine and several other STEM subjects is associated with high returns, while studying many arts subjects – particularly for men – is not: in many cases men on these courses earn less than individuals with similar background characteristics who did not attend university at age 29.
These are among the findings of a new report from the Institute for Fiscal Studies (IFS), co-authored by the Institute for Policy Research (IPR)’s Dr Matt Dickson. Using an exciting new data source, created in collaboration with the Department for Education, researchers were able to link school, university and tax records for everyone who took their GCSEs in England from 2002 to 2007.
The research estimates overall returns to attending university, how they vary by subject and institution, and how they vary by students’ prior attainment. The results focus on a snapshot in graduates’ early careers by looking at returns at age 29. Graduates typically experience faster wage growth than non-graduates through the beginning and middle of their careers, particularly if they are men. Consequently, these results are likely to understate the full impact of Higher Education (HE) on male lifetime earnings.
The key findings are all based on comparing HE attenders with non-attenders with similar prior attainment and other characteristics. They include:
- On average, attending HE increases the age 29 earnings of men by 6% and women by 26%.
- Studying creative arts, English or philosophy degrees actually appears to result in lower earnings at age 29 for men, on average, than they might have got had they not attended university.
- Overall, 85% of students – 67% of men and 99% of women – attend an institution that on average increases earnings at age 29 compared with not going to university.
- Prior attainment matters. Attending university boosts the age 29 earnings of men with relatively low GCSE grades who do not have a maths or science A-level by about 4% though this rises to around 18% for those with higher attainment at GCSE.
- However, there are options for men with relatively low GCSE results that do boost earnings. Computing and business degrees, for example, both increase the earnings of men with low GCSEs and without a STEM A-level by around 10% at age 29.
- The small group of men with the highest GCSE grades and a maths or science A-level who do not go to university do very well in the labour market.
- Attending HE has a significant positive impact on the early-career earnings of women with all types of prior attainment.
On the report, Dr Matt Dickson adds:
"This analysis represents a huge advance in the quality of information available to prospective students and policymakers on the returns to higher education in the UK, something which is particularly important for those from non-traditional HE backgrounds.
Going to University in the mid-to-late 2000s increased earnings at age 29 by around 26% for women and 6% for men, compared with students who attained similar GCSE and A-level grades but did not go on to University. For women, HE is already paying an excellent return in the early years of the career, while for men the returns are lower but it should be borne in mind that graduate earnings grow at a steeper rate than non-graduates and so the returns will be increasing over the lifetime.
The administrative data we used for this work allows us to look beyond the average impact and explore the wide variation in returns depending on subject chosen, HEI attended and prior attainment. This is very important information as it allows prospective students to see that there are high return subjects whatever their level of prior attainment, but also some others that have low or even negative early career returns."
Visit the IPR Blog for further analysis on this report from Dr Matt Dickson.