Degrees pay - unless you are a male arts graduate

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Question: You are male. You have two A-levels. What decision could you take about your future that your bank manager would least like to hear?

Answer: I want to go to university to study for an arts degree.

Research published today shows male arts graduates are likely to earn 4 per cent less over their lifetimes than if they had decided not to go to university. On the other hand, if they had studied medicine, they would be likely - on average - to rake in an extra £340,000 during their working lives.

The male arts graduates are out of step with all of their fellow graduates.

The research, by PricewaterhouseCoopers and London Economics - commissioned by Universities UK, the umbrella body representing vice-chancellors, paints a rosy picture of the value of a university degree.

It shows that - despite the massive increase in student numbers during the 1990s - a university degree can still add £160,000 (between 20 and 25 per cent extra) on average onto a graduate's lifetime earnings.

"There has been no erosion of the financial benefit of a degree even though there has been a substantial increase in the supply of graduates over the last 15 years," the report concludes. In fact, it goes further and suggests today's would-be graduates - the first to be learning under the new top-up fees regime and paying up to £3,000 a year for their courses - are likely to fare better than those who studied under the previous flat-rate £1,100-a-year tuition fee policy.

That, according to the report, is because the cost of going to university is now less than it was as a result of the reintroduction of grants for those from the poorest homes, more bursaries and the Government's decision to waive the payment of fees at the start of the course and to allow interest-free loans repayable over 25 years.

Baroness Warwick of Undercliffe, the chief executive of Universities UK, admitted that the finding had come as a "surprise" but added: "Higher education is still clearly a worthwhile investment for the individual."

Bill Rammell, the Higher Education minister, also welcomed the findings.

The research also showed that women were likely to gain a greater economic benefit from a degree than men - increasing their earning power by between 20 and 23 per cent. However, researchers argued that this could be because women without a degree were earning substantially less than men in the same position.

Of the males, those from the poorest backgrounds were likely to make the most gains - increasing their salaries by around 19 per cent over their lifetimes compared with just 8 or 9 per cent for those from middle class and more affluent backgrounds.

Baroness Warwick conceded that most graduates did not choose to go to university on financial grounds.

The research also showed that graduates were likely to be slimmer, healthier and happier than the rest of the population.

"There are clear benefits associated with an increasingly educated population in the form of improved health, reduced crime rates, social cohesion, civic society and the intergenerational transmission of skills between parents and children," it said.