A quarter of university graduates can now expect to be financially worse off over their lifetime than if they had not gone to university, according to new research that is likely to intensify debate over the value of higher education.
The analysis suggests the financial return from a degree has become far more uneven, with outcomes varying sharply depending on the subject studied, prior academic attainment and career path. It comes as employers increasingly place greater value on apprenticeships alongside, and in some cases above, traditional degrees.
The findings arrive just days before the final Universities and Colleges Admissions Service (UCAS) application deadline, as many school leavers decide whether to pursue higher education, an apprenticeship or enter work directly.
Financial returns vary sharply
The research, by the Institute for Fiscal Studies (IFS), an independent economics research institute, found that while the average graduate can still expect to be around £100,000 better off over their lifetime after tax and student loan repayments, around one in four graduates are expected to make a net financial loss from attending university under today’s funding system.
The variation is particularly marked by subject. Graduates in medicine and economics are expected to enjoy some of the highest lifetime financial returns, while those studying creative and performing arts are among the most likely to earn less over their lifetime than comparable people who did not attend university.
The IFS also found that around 40 percent of men with lower GCSE attainment are expected to be financially worse off after attending university.
Natan Ornadel, a research economist at the IFS and one of the report’s authors, said in a statement: “While money certainly is not the whole story, our latest estimates suggest that university pays off financially for most of those who go.”
“But this does not mean that everyone who goes to university will be financially better off as a result: 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.”
Employers increasingly value apprenticeships
The findings come as research from Employment Hero, an employment software platform for small and medium-sized businesses, suggests employers are placing growing value on vocational routes into employment.
Its survey found that 46 percent of SME leaders now value apprenticeships and university degrees equally, while 37 percent said they place greater value on apprenticeships. Just 11 percent regarded apprenticeships as less valuable.
The research also found that 78 percent of SME leaders held a positive view of apprenticeships, saying they had seen productivity benefits, while 73 percent said they were ready to make use of additional apprenticeship support announced in last year’s Autumn Budget.
Kevin Fitzgerald, UK managing director at Employment Hero, told HRreview that university remained the right choice for many people but should not be viewed as the only route to a successful career.
“Our research shows SME employers increasingly value apprenticeships, not only for the opportunities they create for young people, but for the real business benefits they deliver. The focus now should be on making sure students feel confident considering all their options, while giving employers a system that is simple enough to help them invest in apprentice talent.”
Skills routes continue to evolve
The debate comes as the government seeks to expand vocational training while reviewing the long-term value of some university courses.
Although the IFS stressed that most graduates continue to benefit financially from higher education, it also noted that the graduate earnings premium has fallen by around 30 percent since its previous analysis in 2020, reflecting higher student loan repayments and stronger earnings growth among non-graduates.
For employers, the research points to a recruitment landscape where practical skills, workplace experience and vocational qualifications are becoming increasingly important alongside traditional academic credentials.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
