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Graduate earnings – the only measure of student success?

Kathleen Henehan

Kathleen Henehan

Former ​Policy Analyst
Universities UK


The Institute for Fiscal Studies (IFS) has published a major study comparing graduate earnings. The report has generated a fair amount of media coverage and comment (£).

The research involves a large amount of data and has been a few years in the making.


The IFS study tracks student loan borrowers’ income up to ten years after graduation and allows us to compare how much they have earned according to their social background, the subject they studied and the university they attended. In doing so, we learn, not just about the returns to studying one particular subject (or at one particular university) over another, but also, more about the returns to attending university as opposed to not.

So, what do the findings tell us? While there is significant variation in earnings across different subjects and universities – as well as between students from different social backgrounds – the report is clear: overall, graduates are more likely to be both in work and better paid than non-graduates.

In fact, rese​​arch from the Department for Business, Innovation and Skills has found that the earnings premium for first degrees has a lifetime value of £250,000 for women and £165,000 for men. While previous analyses have shown that even universities with the lowest graduate employment figures still outperform their local employment rates by a large degree.

Main findings

Some of the study’s main findings – on the substantial variation in earnings according to subject – may not come as a surprise to many people. For example, the top-earning male economics graduates earn approximately three times more than the top-earning male creative arts graduates. Medical students, it finds also, were easily the highest earners at the median ten years out.

More information about university courses – and what graduates go on to do – is surely a good thing. Universities are very supportive of initiatives to provide prospective students with clear information on recent graduates’ employment and earnings. Websites such as Unistats provide such data at the institutional and subject levels.

A health warning, however, is required with the use and application of this data. Care must be taken to avoid using graduate earnings as an overarching measure of success. Some universities specialise in fields such as the arts, nursing and public sector professions that, despite making an invaluable contribution to the society and economy, pay less on average.

Finally, the research addresses variation in earnings according to social background and regional differences. Even accounting for subject studied and university attended, it found that students from higher income families earn, on average, 10% more than those from lower-income families. As the paper points out, this gap may be attributable to financial support and the ability to migrate, unobserved characteristics – such as family networks or social skills – or prior academic achievement, which the study wasn’t able to account for at an individual level. The research pointed also to the regional differences in average wages, and the impact of this on more locally-focused universities.​

Regardless of its cause, this gap presents a challenge to both employers as well as the entire education sector, including universities. In fact, Universities UK has launched a Social Mobility Advisory Group, charged with providing advice and support to English universities on improving under-represented groups’ access to higher education and longer-term success.

The research published today sheds a welcome and detailed light on graduate earnings. It reminds us that, while a degree clearly remains worthwhile investment in terms of earnings and life-long skills, more work needs to be done to look at some of the wider issues around social mobility and how we measure success in terms of a university degree.

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