Aug 6, 2026 · 41 min · 10 segments
**More young people than ever are going to university, but the financial stakes have also risen. Many graduates begin their careers with around £50,000 of student debt and could make repayments for up…
Christine FarquharsonGuest
Kate OgdenGuest
So what we mean by financial returns in this context is how much better off an individual is, might be, at a point in time or even over their whole lifetime because they went to university.
So we're thinking here about employment, how likely are they to have a job, how many hours are they working, what their hourly wage is.
All of that adds up to kind of how much that an individual earns in a given year.
And in particular, we're interested in how much someone earns compared to what that person would have earned if they hadn't gone to university.
We're interested in graduate outcomes compared to what that person would have had if they didn't go.
The right estimate for the graduate premium is gonna depend on the question that you're asking.
If you're interested in understanding as a young person yourself, does it make sense for me to go to university? This is exactly the kind of statistic you should be paying attention to.
If you're looking across the labor market as a whole and trying to understand inequalities, for example, or dynamics of earnings trajectories, then you probably care less about that individual counterfactual.
You probably care more about the raw gap between graduates and non-graduates and what they're earning.
And when we talk about financial returns today, we're not just gonna be thinking about, uh, you know, how much more would you earn if you went to university rather than if you didn't.
We're also thinking about netting off the costs of going to university, including all those student loans people take out.
So we're gonna look at the net return somebody gets once you account for those costs of going and the extra tax they might pay.
So what we mean by financial returns in this context is how much better off an individual is, might be, at a point in time or even over their whole lifetime because they went to university.
So we're thinking here about employment, how likely are they to have a job, how many hours are they working, what their hourly wage is.
All of that adds up to kind of how much that an individual earns in a given year.
And in particular, we're interested in how much someone earns compared to what that person would have earned if they hadn't gone to university.
We're interested in graduate outcomes compared to what that person would have had if they didn't go.
The right estimate for the graduate premium is gonna depend on the question that you're asking.
If you're interested in understanding as a young person yourself, does it make sense for me to go to university? This is exactly the kind of statistic you should be paying attention to.
If you're looking across the labor market as a whole and trying to understand inequalities, for example, or dynamics of earnings trajectories, then you probably care less about that individual counterfactual.
You probably care more about the raw gap between graduates and non-graduates and what they're earning.
And when we talk about financial returns today, we're not just gonna be thinking about, uh, you know, how much more would you earn if you went to university rather than if you didn't.
We're also thinking about netting off the costs of going to university, including all those student loans people take out.
So we're gonna look at the net return somebody gets once you account for those costs of going and the extra tax they might pay.
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