Graduates' earnings stay ahead

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University graduates earn on average about a quarter more than young people who leave school after their A-levels, a study has suggested.

Higher education organisation Universities UK measured the economic impact of getting a degree.

It found average additional earnings of £160,000 over a working life.

But there are very wide variations - with arts graduates only gaining a tenth of the additional earnings received from a medicine degree.

The research, carried out by PricewaterhouseCoopers, shows that going to university brings significant benefits to young people when they enter the labour market.

Earnings boost

And the report concludes that there is "no evidence of an erosion of the graduate premium despite increasing numbers of graduates" - as the demand from employers for graduates has also continued to increase.

DEGREE EARNINGS PREMIUM Medicine: £340,315Engineering: £243,730Maths: £241,749Business: £184,694Average graduate: £160,061Languages: £96,281Humanities: £51,549Arts: £34,494 Source: Universities UK/ PricewaterhouseCoopers

But there are considerable differences in the extent to which individual graduates benefit.

Women gain more financial advantage than men from getting a degree. And men from poorer family backgrounds increase their earnings more than men from more affluent homes.

Degrees such as medicine, law, sciences and languages deliver higher returns than arts and humanities.

While the "graduate premium" in earnings for a medicine degree is £340,315, an arts graduate can expect to receive only an additional £34,494, over a working lifetime.

The Universities UK report also says that graduates are less likely to be unemployed.

These comparisons are with students entering the workplace with A-levels - rather than those leaving after GCSEs. And in practice, a large majority of students who stay in education beyond the age of 16 continue into higher education.

But these latest figures show a much lower figure for the financial benefits of university compared to the amounts quoted by the government during debates over the increase in top-up fees.

The figure of additional earnings of £400,000 was used widely - but this amount was described by Universities UK's chief executive Baroness Warwick as "flawed".

However the PricewaterhouseCoopers researchers have backed the tuition fees system - saying that the increase in fees has not reduced the economic advantage of going to university.

Despite a higher headline charge from the £3,000 per year fees, the report concludes that the "rate of return from the new student support funding regime is a better deal than the pre-2006 arrangements".

"This report provides evidence that despite the expansion of higher education, the graduate premium has been maintained. Higher education is still clearly a worthwhile investment for the individual," said Baroness Warwick.

Higher Education Minister Bill Rammell said the report "confirms what we have been saying for some time now - that graduates, on average, earn more and are more likely to be in a job than those without degrees, and that higher education is likely to be the best investment a student will ever make".