Recently graduated? Still riding on the buzz of throwing your cap in the air? Just remembered that you’re still unemployed? After spending at least £27,000 on your degree, why not take the time to calculate exactly how much you could be earning in a post-university society. While you might think that the degree you chose to study will be what most strongly determines your post graduate earnings, a new report by the Institute for Fiscal Studies (IFS) has found that your ethnicity and family’s household income also play a key role in predicting how much you will earn once you leave the student life behind you.
One of the first key conclusions of the study is that the richer your family, the more likely you are to earn more after you graduate. This might not seem ground breaking, but it is important when considering that these findings are not based on individuals being given money from their family. Statistically, bright students from rich families are most likely to go on to be doctors. Although you will have to study for at least five years, part of your course is funded by the NHS and you could go on to earn 70% more than the average degree holder does five years after graduation.
One aspect that the study neglected was why students from richer backgrounds go on to earn more after they graduate, even when this is not a result of their parents giving them money. Well, it all boils down to calculating an individual’s’ “true” socioeconomic status. This includes analysing how many people went to university in the neighbourhood they grew up in; were the individual’s in question able to afford extra-curricular tuition; were their parents in a position to give academic support afterschool, rather than doing shift work which might prevent this etc. All these factors combined can have a serious impact on how well a student will do at university and, thus, how much they will earn after they graduate. For example, an earlier IFS study found that “the average gap in earnings between students from higher and lower income backgrounds is £8,000 a year for men and £5,300 a year for women, ten years after graduation”.
An equally as important note to take from the study is how ethnicity plays a big role in predicting how much you could earn after you graduate. For example, men of Bangladeshi descent are likely to earn 9% less than their white male colleagues, despite their academic ability, subject studied and university attended. Students from the North of England face similar disadvantages, according to IFS. Although, this of course is not exempt from the calculation of one’s “true” socioeconomic status, as race and working-class backgrounds are key components in influencing data on how much graduates will earn once they leave university.
Interestingly, the IFS also found that the majority of students studying arts-related degrees will go on to earn no more than their non-degree equivalents. However, this has also been linked to a student’s family’s socioeconomic background, as GCSE and A-level achievements greatly influence university degree choices. So, if you have received tuition for “harder” subjects like maths and the sciences, then you are better placed to study medicine, graduating with an income around £13,000 higher than the median graduate wage.
So, has university been worth it for you? Does how much you’ll earn after you graduate have a significant impact on what degree you chose to study? Let us know in the comments below!