Earnings boost from university has halved over a generation

THE value of a university degree is diminishing, as a study reveals that the earnings of today’s graduates outstrip those of school leavers by as little as three per cent.

The gap in earnings between those who went to university and those who did not has almost halved in a generation, according to a study by Warwick University and the Higher Education Statistical Agency.

Researchers found that graduates born in 1970 earned 19 per cent more than non-graduates at age 26. However, those born in 1990 earned just 11 per cent more at that age than their peers who did not go to university.

The study also examined the difference in salaries depending on what degree class was awarded.

People who were born in 1970 and graduated with a first-class degree or upper second (2:1) went on to earn 20 per cent more than their non-graduate peers at 26. This figure dropped to 14 per cent for those awarded a lower second-class degree (2:2) or below.

Two decades later, the difference in earnings changed considerably. Those who were born in 1990 and graduated with a first or 2:1 earned just 14 per cent more than their non-graduate peers, and those with a 2:2 or below earned only three per cent more.

Nick Hillman, the director of the

Higher Education Policy Institute, said the study showed how crucial the boundary was between an upper second and a lower second degree.

“People used to boast about getting a ‘Desmond’ [Tutu, the anti-apartheid activist] 2:2 or a ‘Thora’ [Hird, the actress] third. No one wise would wear that on their sleeve now if they want a professional-level job,” he said.

Universities have come under pressure in recent years to crack down on grade inflation. Almost four in five students now get a first-class or an upper second university degree, according to the latest official statistics.

In the last academic year, 48 per cent were awarded a 2:1 and 28 per cent got a first, double the proportion that gained a first a decade ago.

Hesa researchers said the narrowing of the gap in salaries between graduates and non-graduates could be explained partly by strong pay growth in non-professional occupations. They said another reason could be that employers often stipulate that a 2:1 is a minimum requirement to get through their “initial sift” for applicants.

Researchers said graduates usually had steeper growth in their earnings over time than non-graduates, which this study was not able to capture.

Mr Hillman added that people who were born in 1990 graduated in the austerity years, so their earnings at age 26 may be affected by this.