Graduate earnings: Degrees of affluence?

The graduate earnings 'boost' factor is highly selective, discovers Grace McCann

One of the justifications for top-up fees is that graduates are able to earn substantially more than people without degrees. The Government says this premium amounts to an average of £400,000 over a lifetime, a figure that is disputed by some experts.

Now, a report by the Council for Industry and Higher Education has found that the salary boosts that some of the best universities confer on a graduate cannot be taken at face value. "There is a 'brand value' in a degree from a leading Russell Group institution, but it's not as great as people have imagined," says Richard Brown, the council's chief executive.

The report, by Dr Gavan Conlon of the Centre for the Economics of Education at the London School of Economics and Dr Arnaud Chevalier of University College Dublin, confirms the common-sense assumption that graduate earnings vary according to the institution attended. "There are huge disparities in earnings according to type of institution and subject studied," says Dr Conlon, who is on secondment to the Department for Education and Skills. But when all factors are taken into account, including subject choice, social background and gender, the earnings premium offered by a Russell Group degree is halved.

"A key finding is that Russell Group degrees confer an earnings premium of 10 per cent within three years of graduating," says Conlon. "But after six to 11 years this falls to five per cent." And it is a moot point whether the 10 per cent hike comes from the skills bestowed by a superior institution, or because the graduate has told employers that they went to, say, University College London or Imperial.

Conlon stresses that differential fees are not something to be introduced lightly because they could affect participation. "People from lower social classes would be less likely to apply to expensive Russell Group universities." For that reason it is likely that caps would need to be introduced to prevent some universities setting fees too high, says Richard Brown. He adds that the report's findings also suggest that if differential fees were introduced, there would be a case for successful new universities to levy them too. According to Conlon, it's also important to note that, premiums aside, the actual cost of certain degrees may differ little between a leading and a new university.

education@independent.co.uk