The Institute for Fiscal Studies (IFS) has estimated that one in four UK graduates will be financially worse off after attending university, particularly those pursuing creative or performing arts degrees. The research, funded by the Department for Education, analyzed the earnings of students who graduated during the 2008 global financial crisis.
Financial outcomes vary by degree
While the IFS projects that the majority of graduates will be £100,000 better off in lifetime pay due to their degree, about 25% might have fared better without higher education when factoring in likely pay, student loans, and taxes. Natan Ornadel, a research economist at the IFS and report author, stated: "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."
Government response and loan changes
The Department for Education, which funded the research, has outlined plans to draw up options for legislation to cap student numbers for courses with poor outcomes. The government is also considering minimum requirements for domestic students to access loans, such as a pass in GCSE English. This comes amid controversy over university funding and student loan repayments in England after the government increased the amount future students will repay.
Impact on social mobility
Nick Harrison, chief executive of the Sutton Trust, highlighted the dilemma for low-income families: "The value of university goes well beyond earnings. University can be a life-changing experience... At the same time, this report raises an uncomfortable question. If we are telling young people not to go to university, what exactly are we telling them to do instead?" He noted a shortage of high-quality alternatives like apprenticeships.
Defense of creative arts degrees
Vivienne Stern, chief executive of Universities UK, defended creative arts degrees: "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."
Shrinking graduate premium
The IFS 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 qualifications showed little change, while pay growth for non-graduates exceeded expectations.
