One in four graduates will lose financially from going to university, IFS estimates

About one in four UK graduates would have been better off financially without a degree, according to new projections from the Institute for Fiscal Studies, which found the graduate pay premium has shrunk by 30% since its 2020 analysis. The IFS research, funded by the Department for Education, tracked the earnings of students who graduated during the 2008 global financial crisis [1]. While the majority of graduates are projected to be £100,000 better off over their lifetimes, roughly 25% end up worse off once pay, student loan repayments, and taxes are accounted for [1]. Natan Ornadel, a research economist at the IFS and an author of the report, said: “We estimate around a quarter of graduates – and 40% of men with low prior attainment – end up worse off than they otherwise would have been” [1]. The findings arrive amid heightened scrutiny of university funding in England, where the government has increased the amount future students will repay [1]. The Department for Education said it had “outlined plans to draw up options for legislation” to cap student numbers on courses with poor outcomes [1]. The IFS noted that the shrinking graduate premium was partly driven by higher student loan repayments and stronger-than-expected pay growth for non-graduates [1]. Nick Harrison, chief executive of the Sutton Trust, a charity founded in 1997 by Sir Peter Lampl to improve social mobility and address educational disadvantage, cautioned against steering young people away from higher education without providing alternatives [4]. “There is no shortage of criticism of so-called low-value degrees, but there is a chronic shortage of high-quality alternatives,” Harrison said [1]. He added that university can be “a life-changing experience, helping young people build social networks, life skills, and dreams and aspirations for the future” [1]. Vivienne Stern, chief executive of Universities UK, defended creative arts degrees, noting that those subjects feed the UK’s creative industries, which she described as “a huge economic driver” [1]. “My bet is that, in an age of AI, we’ll value the understanding of how human beings think and act more, not less, in the future,” Stern said [1]. Rachel Hewitt of MillionPlus, which represents universities such as Sunderland and London Met, said the analysis was “a clear reminder that financially, for the vast majority of students, going to university pays off” [1]. The IFS found that career choice heavily influenced outcomes, with economics and medicine graduates more likely to secure highly paid roles [1]. The report compared graduates with individuals who had similar school-level qualifications but did not attend university, showing little change in the relative pay gap for that comparison group [1].