A degree in economics or medicine can be worth an extra £10,000 per year to graduates from British universities, outperforming even those from private schools, according to a new report by the Institute for Fiscal Studies (IFS). The study reveals that students from lower-income backgrounds who choose these subjects can significantly boost their earning potential.
The IFS research analysed years of education and taxation data and found that graduates in top-performing subjects, such as economics and medicine, earn around 20% more than the average graduate. Other fields like business, computing, and architecture also demonstrate strong financial returns, with graduates in these subjects earning over 10% more several years into their careers.
The report highlights the substantial financial implications of these differences: average graduate earnings typically range from £26,000 to £30,000 five years post-graduation. For those in top-performing subjects, this can translate to an additional £10,000 annually. Over a lifetime, such disparities could represent a significant difference in total income.
Conversely, the study shows that creative arts degrees, pursued by approximately 10% of university students, pay 15% less than the average graduate salary, with even lower returns for those from less affluent backgrounds. The gaps between highest- and lowest-earning courses are stark: economics at the London School of Economics or mathematics at Imperial College London offer graduate earnings twice the average, while the lowest-earning courses are 40% below.
Jack Britton, a senior research economist at the IFS, notes that family background plays a role, but choosing the right subject and institution can be even more critical for future earnings. He points out that attending a Russell Group institution adds around 10% to earnings compared to an average university.
The findings have sparked debate within the higher education sector, with former Higher Education Minister Sam Gyimah highlighting the "far-reaching ramifications" of the results on the debate over university funding. He noted that underperforming degrees concern students, taxpayers, and the reputation of the sector, particularly regarding the public cost of student loans for courses where graduates do not typically secure graduate-level salaries.