Why a degree is still worth the loan

Study shows the student influx has not forced down the value of degrees
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The Independent Online

Graduates are still earning the same "cash premium" from having a degree despite the expansion of higher education which has seen the number of students double in recent years.

A study of two different sets of 28-to-30-year-olds – one graduating before universities expanded and the other after – reveals the extra money they can expect to earn from having a degree has held up.

Women can expect their premium to go up by an extra 10.5 per cent as more infiltrate top paid graduate jobs. For the average woman with a degree that means she will earn an extra £195,000 over a lifetime's employment on average. In the case of the average man, it will be around £160,000.

The research, by Ian Walker of Lancaster University and Yu Zhu of Kent University, will be seized on by ministers to support their campaign to widen participation in higher education.

Some commentators have argued that the rapid expansion of higher education – student numbers went up by 93 per cent between 1988 and 1996 – would mean "lower ability" graduates, thus leading employers to adopt a negative attitude towards degree holders.

But the research, which has so far only been published overseas, debunks that theory as a myth. It shows that women who prior to expansion could expect to earn 28 per cent extra over a lifetime as a result of obtaining a degree have seen that rise by an extra 10.5 per cent. By the same token, those with A-levels who have failed to go on to higher education have seen their earnings drop by 6.6 per cent.

In the case of men, their "premium" remains the same at 18 per cent. The research shows the average man with two A-level passes or more who does not go on to university earns £13.50 per hour. With a degree the figure is lifted to £16 – around £34,000 extra a year.

The research predicts the average women with two A-levels will earn £9.75 per hour and that pay discrimination would further decline moving down the pay scale. Butdegree-educated women would earn an extra £3 an hour – which translates as £5,000 a year or £195,000 over a lifetime in work.

This 10.5 per cent added premium for women since the expansion of higher education has added £20,000 extra to their lifetime's earnings.

University participation figures show the percentage of men going to university rose from 15 per cent in 1987 to 30 per cent in 1993. That figure has now grown to 37 per cent of British men attending university. For women, just 13 per cent were university-educated in 1987, that figure grew to 35 per cent in 1993 and is now 49 per cent.