The Institute for Fiscal Studies (IFS) estimates that one in four UK graduates will be financially worse off after attending university, particularly those who pursued creative or performing arts degrees. The research, based on the earnings of students who graduated during the 2008 global financial crisis, projects that while most graduates will see a lifetime pay boost of around £100,000, about 25% would have been better off not entering higher education when factoring in pay, student loans, and taxes.
Government Response and Proposed Caps
The Department for Education, which funded the IFS research, has stated it will draw up proposals to cap student numbers on courses with poor outcomes. This follows controversy over university funding and student loans in England after the government increased repayment amounts for future students. The government is also considering minimum requirements for domestic students to access loans, such as a pass in GCSE English.
IFS Findings on Graduate Premium
Natan Ornadel, a research economist at the IFS and author of the report, said: "A degree remains a major financial boost for most graduates compared with their potential pay with no degree but similar school results. But this does not mean that everyone who goes to university will be financially better off as a result: we estimate around a quarter of graduates – and 40% of men with low prior attainment – end up worse off than they otherwise would have been."
Much of the variation stems from career choices, with economics and medicine graduates more likely to secure highly paid jobs. The IFS also found that the "graduate premium" – the gap between graduate and non-graduate pay – has shrunk by 30% compared to its 2020 research, partly due to higher student loan repayments. Comparing graduates with non-graduates who had similar school-level qualifications showed little change, while pay growth for non-graduates exceeded expectations.
Social Mobility Concerns
Nick Harrison, chief executive of the Sutton Trust, a charity promoting social mobility through education, said the IFS report and the government's response raise uncomfortable questions for people from low-income families, for whom a degree is "the most reliable route" to upward mobility. He added: "The value of university goes well beyond earnings. University can be a life-changing experience, helping young people build social networks, life skills, and dreams and aspirations for the future. We've also found that graduates report higher wellbeing and happiness than non-graduates, regardless of background or career destination."
Harrison questioned: "If we are telling young people not to go to university, what exactly are we telling them to do instead? There is no shortage of criticism of so-called low-value degrees, but there is a chronic shortage of high-quality alternatives. Apprenticeships and technical pathways can offer great prospects for progression and success, but there are simply not enough of them available to be a viable alternative for lots of young people."
University Leaders Defend Degrees
Rachel Hewitt, chief executive of the MillionPlus group of universities (including Sunderland and London Met), said: "This analysis is a clear reminder that financially, for the vast majority of students, going to university pays off."
Vivienne Stern, chief executive of Universities UK, defended creative arts degrees, noting that students may not be motivated solely by money: "We should recognise that these subjects also feed the creative industries which are a huge economic driver for the UK. And as a humanities graduate myself, my bet is that, in an age of AI, we'll value the understanding of how human beings think and act more, not less, in the future."
