IFS Finds One in Five Students Lose Money by Going to University


Research comparing the lifetime earnings of graduates and non-graduates shows that one in five students would be in a better financial position if they avoided higher education. 

According to research by the Institute for Fiscal Studies (IFS), while 80% of former students gained financially from attending university, roughly 20% earned less than those who performed similarly at school and did not go to university. Certain subjects like creative arts also provide the worst financial returns.

Tax data used to measure the earnings of those who went to university from the mid-90s onwards reveals after accounting for student loans and taxes, men generally earned £130,000 and women £100,000 over their careers, compared with their peers who didn’t pursue higher education.

Researchers found that women reached a glass ceiling on earnings growth in their 30s and 40s, even among Oxbridge graduates.

The report arrives as the government in England continues to closely examine universities and graduate outcomes. Some ministers are also looking to restrict the number of people taking “low-value” courses.

On the whole, the research indicates the government benefited from extra tax revenue and national insurance contributions of £110,000 per male and £30,000 per female.

Ben Waltmann, an IFS economist and co-author of the report offers his perspective:

The exchequer gains a lot on average from higher education, despite the high costs of writing off unpaid student loans. That is mainly because high-earning graduates go on to pay an awful lot of tax… but this analysis also shows that the government makes an overall loss on financing the degrees of nearly half of all graduates. These losses are concentrated amongst those studying certain subjects. For creative arts, for example, the losses are substantial. This need not mean that the government is misallocating funds but it is important to be aware of the costs involved.

Michelle Donelan, the universities’ minister, has also expressed her concerns over the value for money for students at university:

It is no surprise our universities attract students from all over the world. However, that prestige is built on quality and my role is to work with the regulator to safeguard that, while ensuring students and the taxpayer are getting the value they would expect for their investment.

The Department for Education states the earnings data would ‘help students of all ages make smart choices about their future.’

However, according to Jo Grady, the general secretary of the University and College Union, ‘education is about much more than just financial benefit.’ Concentrating on graduate income ‘ignores the wider benefits that education brings to individuals and to society.’

The data also suggested a divide between men and women in earnings, with the top 10% of males who studied economics or medicine earning on average £500,000 more than their peers, while women studying the same subjects had average gains of just £250,000.

Women’s earnings growth in their thirties was far lower than men’s most likely due to factors like childbearing and family formation. Women ‘see little difference in average returns’ across different universities compared to male graduates who went to Russell Group and Oxbridge universities, who earn more than their peers at other institutions.

Another co-author of the report, Jack Britton highlights the importance of the 30s for male graduates:

Rapid earnings growth of male graduates in this period has a large positive impact on their average return to higher education such that three quarters of men end up better off as a result of having done a degree.

The new research is based on annual incomes and fails to take into account number of hours worked.


Former Head of Outreach 2019-20. Final year English student, passionate about world affairs, dancing and history.

Leave A Reply