Student loans and earning potential
Women with degrees can earn on average £250,000 more over a lifetime than women without degrees. While men can expect to earn £170,000 more if they have a degree, says a new report. Commissioned by the BBC from the UK’s Institute for Fiscal Studies. It puts the cost of any student loan into perspective.
The report concludes that it definitely pays to have a degree. Although the choice of where to study can also make a huge difference to future earnings. Five years after graduating, students from Oxford, LSE and Imperial College earn on average more than £40,000. While graduates from the 24 Russell Group universities (the UK’s most prestigious institutions) earn an average of £33,500 after five years. This is around 40% more than those who studied at other universities.
Student loans and subject choice
Subject choice is also, perhaps more obviously, key to determining graduate salary. The report shows graduates who studied medicine or dentistry earned on average £46,700 compared with the creative arts (the lowest earners at an average of £20,100) after five years. Maybe the most unsettling data revealed that male graduates from wealthier backgrounds earned around 20% more than peers from poorer backgrounds. Who had studied the same subject at university (16% difference for female graduates). There was even a 10% earnings gap between richer and poorer-household graduates who studied the same subject at the same university!
So, how to advise your teenagers? Society needs the arts, history, psychology and nursing graduates as much as it does the lawyers and doctors. The most important factor seems to be gaining a degree in the first place. The student loan at least makes this possible for lower-income families if universities are to put up their fees further. What the UK government has agreed to do (from May 2018) is increase the threshold at which students need to start paying back their loans. The next blog will look at the effects of both these increases.