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Higher Education: Funding

Volume 460: debated on Wednesday 23 May 2007

To ask the Secretary of State for Education and Skills pursuant to the statement of the Minister for Higher Education and Lifelong Learning of 15 May 2007, Official Report, column 225WH, on higher education (funding), what figures he used to calculate that there is on average net £100,000 graduate earnings premium; and how he used those figures to reach that final figure. (138731)

Over the working life, the average net graduate earnings premium is comfortably over £100,000 in today’s valuation, compared to what a similar individual would have earned if they just had A levels.

The data which underpin this figure are taken from the Labour Force Survey. We estimate the effect on net additional earnings from getting a degree, after allowing for factors like gender, age, and the probability of being employed. The figures are also discounted so that they are in ‘today's valuation'. Comparing the lifetime earnings profiles of otherwise similar graduates and those with A levels, we find that graduates can expect to earn, after taxation, over £100,000 more than similar non-graduates. Recent research by PricewaterhouseCoopers estimated the discounted gross (i.e. pre-tax) additional lifetime earnings associated with a degree to be around £160,000.