Graduate returns divide widens as university no longer guarantees financial rewards

A university degree still delivers a substantial lifetime earnings premium for most students, but new research suggests that around one in four graduates will be financially worse off after accounting for student loan repayments and taxes. Returns vary significantly by subject, with medicine and economics generating some of the highest rewards, while some creative arts degrees produce negative financial returns. The findings highlight the importance of human capital investment, occupational choice and labour market demand, while raising questions about whether higher education always represents the most efficient route to improving productivity and living standards.

One in four graduates will lose financially from going to university, IFS estimates | Higher education | The Guardian

1. Explain why the private rate of return to a university degree differs between subjects and individuals.

2. Assess whether higher education generates positive externalities of consumption.

3. Discuss whether the labour market provides efficient signals about the value of different university degrees.