Best and Worst Paying University Degrees

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Best and worst paying university degrees

By Neil Faulkner

We look at the value of a university education, tell you whichdegree is the best value and explain the premium you earn forpost-graduate training.

Do degrees always pay off in the long run, despite the costsassociated with them? And what are the best and worst paidsubjects to study?

All the comparisons we make in this article are betweengraduates and those who could have gone to university butdidn't (i.e. they had two or more A levels or equivalent

qualifications).

Subject matters

It's no surprise that there are wide variations in averageearnings depending on the subject studied. Arts graduates earnjust £35,000 extra (compared to non -graduates) whilst medicinegraduates earn a massive £340,000 extra, on average, duringtheir lives.

Average extra earnings for graduates by subject studied

Subject studiedAverage extra earnings(compared to non-graduates)

Medicine £340,000

Law £245,000

Engineering £245,000

Maths £240,000

Physics £190,000



C hemistry £185,000

Business £185,000

European languages £165,000

Psychology £100,000

Linguistics andEnglish £95,000

Humanities £50,000

Arts £35,000

Data from 2005 and 2007

Earnings growth steady in early years

Regardless of which degree you take, earnings grow at aconstant rate in the first few years. However, they typicallyballoon in the mid -years in some subjects, such as chemistry.

Averages can be misleading...

...to say the least. There is massive variat ion within eachfield, which explains why some people get irate at so -called'average earnings'. One graduate working in the same field oreven the same job as another can easily earn one -third lessthan some colleagues.

Average graduate earnings

While graduates often start off earning a similar amount tonon-graduates, this changes quickly over the years.

For example, in 2008 (the latest statistics we could find), atypical 21-year-old graduate earned just £17,472 a year, whilea non-graduate with A levels earned £15,912 a year.

However, the typical 33 -year-old graduate earned £37,960 ayear, while the typical 34-year old non-graduate earned just£27,768 a year.

Age in 2008Degree orequivalent

A-level, G C E orequivalent

21-22 £17,472 £15,912

23-24 £20,696 £18,200

25-26 £24,960 £20,436

27-28 £28,912 £22,256



29-30 £32,916 £24,180

31-32 £34,632 £24,336

32-33 £37,960 £27,768

All ages (21 -34)

£28,860 £21,268

Source: Prospects.ac.uk

Average extra lifetime earnings

On average, graduates earn an extra £160,000, or 23%throughout their lifetime (which is even greater after tax).That's an extra £3,600 per year, compared to non -graduates.That's despite increasing numbers of young people gettingdegrees: a third now do, compared with just 15% 20 years ago.

Public sector benefits less visible

Most graduates in the public sector seeing earnings statisticsover the years will probably conclude they are unrealistic,but in return for a lower income most get greater job sec urityand pension benefits.

Do degrees always pay off?

No, not always. The evidence is limited, but it seems that menwith arts degrees usually earn slightly less than theircounterparts who chose not to go to university. A case of

those who can, do - perhaps?

It's also true that, without a degree, you can still earn morethan the average graduate. Those taking training places fromone of the big accountancy or law firms, for example, cancircumvent the need and cost of a degree.

Also, degrees are exp ensive. The average student leavesuniversity with debts totalling £15,700 and the currentaverage graduates starting salary is just £22,300. Even ifyour salary goes up every year by almost 5%, it will stilltake you around 12 years to pay off your debt, which will cost

you even more than you think .

Finally, it's worth bearing in mind that 20% of students dropout of university and a third of graduat es end up with non-graduate jobs. On the plus side, graduates are less likely tobe unemployed.



Degrees are more beneficial for women

On average, research shows that women gain greater financialbenefits from a university education than men do. Women wh odon't go to university tend to earn a great deal less than menwho don't go to university.

However, women's incomes, on average, are boosted more by adegree to make it a more level playing field. To take anexample, men's incomes are boosted 43% by an economics degree,but women's are boosted 63%.

Similarly, men from poorer backgrounds also benefit more fromuniversity than men from affluent ones. Discrimination, itseems, is more difficult for employers when you've got adegree.

There is still discri mination towards graduates

However, there is still a big difference in average earningsbetween male and female graduates, with men earning at least£14,000 more over their working lives. (We suspect it's quitea bit more on average, but unfortunately the re seems to belittle research on this topic. If you know a better statistic,please share it on lovemoney.com using our comments section.)

Law comes top

This is the most important section in the article. Whilstmedicine earns more, it also costs more. W hat's more, you loseout on income, because you're studying (and so not working)for more years. When you factor all these things together, lawis the better investment with an average rate of return ofmore than 17% per year:

The annual rate of return on your degree

Subject Rate of return

Law 17.2%

Management 16.9%

Engineering 15.5%

C hemistry 15.0%

Physics 14.9%

European languages 14.0%

Medicine (excluding dentistry) 11.6%

C hemical sciences 10.2%

Psychology 10.1%



Linguistics and English 9.7%

History 8.8%

The average rate of return for all degrees is 12.1% per year.This makes a degree the best possible investment (on average),

trouncing the stock market or property over the long term.

Surprisingly, medicine has a lower return than the average at11.6% (although dentists were excluded from the figures)meaning that perhaps we focus too much on doctors' wages andnot enough on support staff.

However, weI suspect that these figures (from 2005) will beout-of-date now. 130,000 doctors earn now, at the very least,£13bn between them, with many earning as much as £380,000 peryear.

Also the figures in the above table may come down now that thecost of university is going up (to an average £23,000 forstudents starting this year, it's estimated). However, someresearchers believe the reverse will happen!

The post-grad premium

Some - but far from all - employers offer a premium for thosewho go beyond a Bachelor's degree. If you're lucky enough toget work for an employer that pays such a premium, those withdoctorates could earn an extra £6,000 from the start. Thosewith master's degrees could earn an extra £4,000 and those

with an MBA an extra £12,000 (although very few employersoffer a premium for MBAs).

That's a lot of statistics. You may need a degree just to takethem all in!

S ources:

y U niversities UK commissioned study by PricewaterhouseCoopers, 2007

y T he Royal S ociety of Chemistry and Institute of Physicscommissioned study by PricewaterhouseCoopers, 2005

y S tudy by Dept for Employment and Learning, 2008 y S tats from the Higher Education S tatistics Agency y Research by Ian Walker from U niversity of Warwick and Yu

Zhu, U niversity of K ent, in 2003 y Association of Graduate Recruiters, 2008 y Callcredit.co.uk

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Best and Worst Paying University Degrees