Gap between graduate and non-graduate earnings has fallen, Hesa finds
A comparison of graduates born in 1970 and 1990 shows that a degree might not impact earnings as much as it used to
The difference between graduate and non-graduate earnings has fallen, new analysis has revealed.
The joint research by Hesa and Warwick University revealed that, on average, graduates born in 1970 earned 19% more than non-graduates by the age of 26, compared to graduates born in 1990 who only earned 11% more.
The study used data from the Labour Force Survey but only shows a snapshot of average salaries. The new study is not conclusive but suggests the relationship between a degree and earnings is not as strong as it was.
The researchers said similar studies of graduates born after 1990 are needed to determine whether this drop is a short-term phenomenon or the beginning of a long-term decline.
Researchers said graduates are more likely to see their earnings increase throughout their careers so there is a chance that degrees hold a ‘delayed boost’ for the 1990 cohort which has yet to emerge.
Changes in fees and funding have resulted in increased reliance on student loans, which are now treated differently in public sector finances
– Tej Nathanwani, Hesa
Tej Nathwani, econometrician at Hesa said: “Whilst the benefits of a degree are not solely financial, higher education remains a significant investment decision for young people.
“Changes in fees and funding have resulted in increased reliance on student loans, which are now treated differently in public sector finances.
“Consequently, graduate earnings continue to be an important area of research in higher education. This study adds to the available information about the financial benefits that individual students can expect from a degree.”
Graduate salaries are not a guaranteed measure of degree value because they can be impacted by external factors like economic uncertainty.
The number of young people aged between 18 and 24 in full-time education has more than doubled since 1994. This year, for the first time ever, 50% of 18-year-olds entered higher education, finally surpassing the twenty-year-old symbolic target set by Tony Blair.
University participation rates dropped from 49.1% to 42.6% in 2012/13 after the cap on tuition fees was increased.