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Money isn’t everything, but choice of degree and university are key to eventual earning potential. Here are some fascinating findings both teenagers and parents need to have in mind.
With Freshers’ Week now safely behind us, parents and students alike must be starting to wonder to what extent University is an investment that will really pay off.
At an annual average of £9,188, University tuition fees in England are now the highest in the world, propelling the total cost of a degree to at least £70,000 (based on £23,000 average total costs each year). So, although earning power isn’t everything, students are right to think carefully about the value a certain degree – and institution – will add.
Recent studies by The Sunday Times, Telegraph and government have examined which courses delivered the highest earnings after graduation. Many of the results of this “best-paying degree” test were not wholly surprising. Oxbridge Russell Group courses dominated the rankings, particularly City-friendly ones, as we might expect.
At an annual average of £9,188, University tuition fees in England are now the highest in the world, propelling the total cost of a degree to at least £70,000
Cambridge Economics graduates were earning £68,600 on average five years after graduating, while Oxford scholars of business and administrative studies earned £67,200. Economics seems like a very good bet generally, with a degree from University of St Andrews or the London School of Economics and Political Science worth £60,000 after five years.
Saddled with debt as many will be, students will also be keen to know where they will earn most one year after graduating.
Here, the Goliaths of tertiary education were slain by the David of Havering College of Further and Higher Education. Engineering and technology graduates of this small college near Romford achieved median salary of £43,200 in 2015-16, beating computer science graduates of Imperial College by £3,000 (2009/10 student of Imperial’s computer science degree could expect to earn £60,000 in 2015/16).
Imperial College London’s computer science graduates are also fast onto the higher earnings ladder, earning £50,000 on average just six months after graduation.
Medicine vs creative arts
Individual courses aside, PAYE-derived figures from the Department of Education show that the degree with the biggest earning power was, unsurprisingly, medicine. Medics earned £46,600 on average five years after graduating.
Creative arts graduates, meanwhile, were at the bottom of the pile earning £20,200 five years after leaving university, against an average of £25,700 across all subjects. Soberingly, technology specialists will eventually earn five times more than arts graduates from little-known universities.
Figures from the Institute for Fiscal Studies looked at whether studying at prestigious universities boosted earning power, finding that it very much does, even adjusting for the fact that big-name institutions tend to take the most privileged students. Going to the London School of Economics gave male graduates at 49% wage boost and females a 37% payday.
Overall, Imperial’s graduates are best paid across subjects according to The Sunday Times rankings, with those who graduated last year earning an average salary of £30,000. In contrast, the most poorly paid on average, graduates from Norwich University of the Arts and Leeds Arts University, earn only £17,000.
A prestige premium was very much in evidence generally. Graduates in accounting and finance from Warwick University earned £32,700 last year against £17,000 for Derby University graduates. Similarly, architecture graduates from Cardiff earn an average £26,000 to begin with, compared to £17,616 for those who read at Liverpool John Moores.
Going to the London School of Economics gave male graduates at 49% wage boost and females a 37% payday.
All these studies confirm that choice of degree and institution are key to eventual earning potential, and while this certainly shouldn’t be the only consideration, it surely has to be part of the picture.
While changing course or even university is not a decision to be taken lightly, remember that it may be an option. Bear in mind that only 15 out of the 132 universities ranked in the Sunday Times Good University Guide see their graduates start on salaries of £25,000 – the point where student loans start to be paid off.
From a wealth management perspective, parents need to be conscious of the full costs of university, and indeed private school fees before that. Some put the total cost of educating each child at close to half a million pounds, making it vital to make proactive moves to meet them well ahead of time. Our Guide to planning and investing for private school fees contains a range of strategies wealth managers can implement for you.
Family financial planning is of course a speciality of wealth managers, and they can assist with everything from helping younger generations onto the property ladder to minimising Inheritance Tax, as well as investments themselves.