We start with three facts about UK higher education. UK graduates earn far more than non-graduates over their lifetime, are more likely to be in work and are far more likely to work later in life.

How, then, can we explain newspaper stories about graduates earning less than they would have done had they not gone to university, being unable to find work and doing jobs that don’t require a degree?

Here’s our view on what’s happening.

Graduates do, indeed, earn more than non-graduates on average. A 2020 study by the Institute for Fiscal Studies (IFS) found that after allowing for previous educational attainment and the cost of a degree, the average male or female earns about 20% more over their lifetime as a result of having a degree.

That generalisation hides some important caveats. Earnings vary, especially by degree subject. The IFS estimates that over their lifetime male graduates in creative arts will be £169,000 worse off than had they not gone to university. At the other end of the spectrum male medical students achieve a return of over £1 million.

Where you go to university matters. The last 50 years has seen a tripling, to 147 institutions, in the number of accredited UK universities. Male graduates of the 34 Russell group universities earn, over their lifetime, more than seven times as much as the least selective universities.

The class of degree plays a role, too. The IFS, for instance, estimates that in law and in economics, a graduate with a 2:1 degree earns 15% more than someone graduating with a 2:2.

On average, graduates earn more than those who don’t go to university, but the IFS also found that roughly one in five graduates will see a negative return from going to university.

Whatever the uplift to earnings from having a degree, it seems to have narrowed. A number of studies suggest that the graduate premium – or the excess income earned by a graduate over their lifetime – is shrinking. Data from the Department for Education (DfE) shows that for graduates aged 21–30 the premium over non-graduate pay fell by one-third between 2007 and 2024. (Even more alarmingly, the data shows that real median graduate pay for the 21–30 age group dropped by 9% over this period.)

One obvious explanation for the waning of the graduate premium is an increase in the number of people with degrees. In 1950, just 3.4% of 17–30-year-olds went to university in the UK. By the year 2000, the proportion had risen to 33%. Today about half attend university.

Competition for graduate jobs has sharpened, with data showing consistently weaker growth in graduate job vacancies than for the overall job market since 2021. The Institute of Student Employers reported that last year businesses received an average of 140 applications per graduate position, the highest since records began in 1991.

A sharply increased supply of graduates has coincided with a squeeze on graduate pay in the public sector and with sharp, real-terms increases in the minimum wage. The inevitable result has been a narrowing of the graduate premium.

If this weren’t complex enough, we need to acknowledge a risk of relying on averages when looking at the graduate premium. If, as seems to be the case, more recent graduates earn less than their predecessors, averages, based on earlier cohorts of graduates, provide a flawed picture of what a degree is worth today.

So what conclusions can we draw? The uplift to having a degree is significant, subject- and institution-dependent, and appears to have narrowed. Graduates are more likely to be in work than those who didn’t go to university, but competition for jobs has intensified and more graduates are doing jobs that do not require a degree. Whether these trends are temporary is hotly debated.

It would help to have better information. We don’t have high quality, timely data on the uplift to earnings and job prospects conferred by a degree (as distinct from pre-18 educational attainment and potential) by subject and by institution. Given that half of young people go to university, this seems like a gap.

We end with a perhaps obvious caveat. This briefing has been about income and jobs. Important though they are, they provide a very incomplete measure of the value of a university education to the individual or to society.