Student debt levels are projected to rise to £25,000 for those starting university this year, research suggests.
So is going to University a ‘good’ investment in pure financial terms?
Official figures from the Office of National Statistics Labour Force Survey reveal that over the last decade university graduates have earned on average £12,000 a year more than those without a degree.
Average salaries for graduates aged 22-64 stood at £30,000, compared with £18,000 for non-graduates.
Interestingly the gap between graduate and non-graduate salaries takes time to show itself – earnings for 22-year-olds were around £15,000 regardless of whether they had a degree or not.
Non-graduate earnings increased every year until the age of 30 before leveling off and peaking at £19,400 at age 34.
Graduates saw their salaries increase faster and over a longer period – leveling off at age 35 and peaking at £34,500 age 51.
ONS statistician Jamie Jenkins explained: ‘We see a big difference based on age, with graduates’ earnings not peaking until they are in their early 50s. After this age, average wages decreased, as the higher earners leave the labour market earlier.
‘The statistics also reveal that gender differences are present in both graduate and non-graduate salaries. While male graduates could expect to earn 20 per cent more than their female peers, men without a degree made 23 per cent more than their female counterparts.
Let’s simplify things by taking a look at 2 career paths.
Graduate
Enters the workforce at 22 and retires at 64
Earns an average of £30,000 over those 42 years for a total of £1.26m. Take off the £25,000 student debt to finish with £1,235,000
Non Graduate
Enters the workforce at 18 retires at 64
Earn an average of £18,000 over 46 years for a total of £828,000
Which shows on average a graduate will earn on average an additional £407,000 over their working lives.
Of course there are a number of other factors, such as vocation, academic ability and the availability of funds up front for study. These figures are also averages, there are some very notable exceptions who dropped out of university and did very well financially, for instance, Bill Gates and Sir Richard Branson.
