Putting a value to university is a controversial move. After all, stretching the mind, nurturing critical thinking and building life-long relationships are said to be priceless pursuits.
In this age of soaring tuition rates, however, lofty ideals do not wipe out crippling student debt or pay the bills. Call it short-sighted or failure to see the bigger picture, but the fact today is many want to see proof of economic returns in the form of salaries earned, job opportunities or career progression, to name a few.
In turn, we see the growth of college rankings, arranging institutions based on such graduate outcomes. Universities commonly display their alumni’s salaries post-graduation.
Now, a newly released UK government report on individuals’ early-career earnings post-university posits itself as “vital evidence for prospective students choosing whether, where and what to study at university”.
The report by the Institute for Fiscal Studies (IFS), commissioned by the Department for Education (DfE), estimates how much 29-year-old English students who studied different degree subjects or at different Higher Education Institution (HEIs) are earning. The dataset then compares these students’ gross annual earnings compared to those with similar background characteristics who did not go to university, but had at least five A*-C GCSEs, controlling for differences in prior attainment, Key Stage 5 subject choices and family background.
This is what the report found:
- University graduates earn a lot more on average than those without a degree. Women who attend university earn 50 percent more than those who did not. For men, the gap is only 25 percent.
- This gap arises from differences in pre-university characteristics. The typical university graduate come from a richer family than those who did not attend. They would therefore be expected
to earn more, even had they not gone to university.
- Accounting for these prior conditions, the average impact of higher education on earnings at age 29 is around 26 percent for women and 6 percent for men.
These are the general findings from the report that also comprehensively dives into subject choices and graduates’ prior attainment.
But one result should stand out for prospective international students: LSE graduates, male and female, received the highest returns from their university degree, compared to those who did not.
Indeed, there is a “considerable variation” in returns according to university. As suspected, elite institutions are likelier to yield graduates with higher earnings. The report said:
“Russell Group and Pre-1992 universities on average still tend to have very high returns after controlling for background characteristics, but there is a reasonable amount of variation around this trend, with some Pre-1992 universities having low (or even negative) returns and a few Other and Post-1992 universities doing very well.”
Russell Group universities refer to the 24 public research universities in the UK, which include Oxbridge and the top universities in London. The Pre-1992 universities, also known as “new universities”, refer to the former polytechnics or central institutions in the UK that were given university status through the Further and Higher Education Act 1992.
Among the 20 percent of men and women who attend the highest-returning institutions, female graduates are found to have higher returns.
“The 20 percent of women attending the highest returning institutions have average returns of at least
34 percent, compared with 20% for the top 20 percent of men.
Before you dash off to apply to LSE, there are two important things to note. Firstly, these earnings are tracked at age 29. While female graduates appear to be doing better salary-wise compared to their male peers, the report notes that there is strong evidence this trend changes after age 30, ie. men who attended university will go on to earn more than women
Then there’s the issue of nationality. The earnings analysed here only refer to English students, which may not transpire equally to a Chinese or Indian national. There are differences caused by the labour market in China or India, for example, which can affect the progress in their career and in turn, the salaries they command. Even if they do choose to work in the UK alongside their English peers, there are significant constraints, like the difficulty in obtaining work visas as well as cultural differences, which can impede their rise on the corporate ladder.
Ultimately, the report serves as proof that it is folly to base the sole worth of higher education on graduate salaries. While the IFS and DfE admit in the report that they’re unable to capture the wider, social benefits of degrees, salaries should not be the sole arbiter in deciding where, what and most importantly, why we choose to go to university.