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How much do graduates really earn and is it still worth going to university?

Emma Lunn
Written By:
Emma Lunn
Posted:
Updated:
27/11/2023

In theory, getting a degree will mean better career prospects and higher pay. But it also means student debt – so is it still worth going to university?

The Department for Education has published graduate and postgraduate outcomes for 2021/21. The figures show that in 2020/21, the average graduate earned £28,800 a year, five years after graduation. This is up 2.3% in a year or 1.3% after adjusting for inflation.

Separate figures from the Office for National Statistics (ONS) show that in 2020, the average earnings of people aged 22 to 29 were £25,896 a year.

The DfE statistics also show that five years after graduation, women earned £3,600 (11.8%) a year on average less than men.

Over the same period, those who had received free school means earned 10% less than those who didn’t.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Three years of study cost roughly £61,000, and while a big chunk of this is covered by student loans, thanks to changes being introduced this year, far more people will end up paying all of this back – plus interest. This is on top of the credit cards and overdrafts that mean an awful lot of graduates emerge from the hallowed halls carrying a deadweight of debt.

“It may well be worth it for many of them. In 2020/21, the average graduate made £28,800 five years after graduation. This puts them around £3,000 a year better off than average at this age – and over time, graduates on professional pathways can expect to see the gap grow.”

Earnings will depend on your degree

But the figures also show that earnings depend on the subject studied at university. The highest average salaries were commanded by those studying medicine at £52,900, followed by economists at £40,900, pharmacologists at £37,600 and engineers at £36,100. Meanwhile, those studying the performing arts made an average of just £21,200 five years after graduation.

A previous study by the Institute for Fiscal Studies (IFS) found that women who studied creative arts and languages earned the same amount during their lives as they would have if they hadn’t gone to university, while men who studied creative arts actually earned less than non-graduates.

“It’s not just about the subject though. The Department for Education also found that those from lower income backgrounds graduate into jobs with lower average salaries – with graduates who received free school meals earning an average of 10% less than those who didn’t,” said Coles.

Female graduates still earning less

The figures show that women face gender pay gap right from the start of their careers – with female graduates making almost 12% less than male graduates five years after graduation.

While some critics explain this gap by saying that women are more likely to study subjects that lead into lower-paid industries, other figures show that they earn less when working in the same professions as men.

For example, the IFS study found that women who studied economics or medicine earned an average of £250,000 more during their working lives than those who didn’t go to university, while men studying the same subjects earned £500,000 more.

Coles said: “This is likely to owe much to the fact that women are more likely to adapt their working lives to caring responsibilities which may mean career breaks or periods working part time.

“For some people, the maths still stacks up, and university is worth the investment. For others, the experience of going to university is worth the cost, regardless of whether it pays financially. However, there will be others who are more persuaded by the attractions of alternative routes that won’t leave them with a mountain of debt.”