Despite growing disillusionment with the value of a university degree, new data sets suggest that, on average, the financial returns to higher education remain healthy. However, undertaking a degree has become riskier, with a troublingly high share of students seeing negative returns from their studies. New data sets, such as tax records, are shedding light on the dispersion of earnings among different courses and institutions, which can help students make more informed choices. It could also be useful for governments looking to crack down on “low-value degrees”.
The wage premium for those with a university education began to soar in the 1980s, with the difference in salaries between university graduates and high school graduates increasing significantly. However, in recent years, the wage premium has either stagnated or fallen in many countries. Meanwhile, the cost of a degree has risen, with tuition fees in England reaching the highest in the rich world. In the US, the out-of-pocket fee paid by an average bachelor’s-degree student has also increased significantly.
Despite these rising costs, the average degree still holds value. According to a study, the typical rate of return on the money invested in a bachelor’s degree is around 14%, although this has dropped from a peak of 16% in the early 2000s. While this is a decrease, it is still a significant return. However, it is important for students to make informed choices about their subject of study and timely graduation to maximize their potential earnings.
In conclusion, while there is growing disillusionment with the value of a university degree, new data sets suggest that, on average, the financial returns to higher education remain healthy. However, undertaking a degree has become riskier, with many students seeing negative returns from their studies. It is crucial for students to make informed choices about their course of study and graduation timing to maximize their potential earnings. Despite rising costs, the average degree still holds value, with a typical rate of return of around 14%.
