Is university worth it?

CISI Chief Executive Simon Culhane, Chartered FCSI, revisits this question in an updated version of an article first published in The Review in March 2010, which examines whether obtaining a degree is really the best option for young people


When, in 2003, the Government was marshalling the arguments for the introduction of tuition fees, its white paper, The future of higher education, claimed that “those who have been through HE in the UK earn, on average, 50% more than those who have not”.

Various other studies around the same time suggested that for every year of higher education an individual received, it was worth an additional 10%–15% wage premium.1 Over the lifetime of a theoretical average graduate, the value of this additional benefit was assessed at around £200,000 over a non-graduate.

Therefore, the Government argued, tuition fees were a just contribution that an individual who would earn significantly higher financial rewards should make, and strongly encouraged more young people to enter higher education. In 1990, the percentage of 17–30 year olds in higher education was almost 20%. This figure continues to grow: the provisional Higher Education Initial Participation Rate (HEIPR) estimate for the 2013/14 academic year was 47% for 17–30 year olds, according to statistics published last September (latest data).

The supply of graduates has increased significantly and, initially, demand kept up, but with a more difficult economic climate there has been a dramatic fall in estimates of the lifetime premium to around £100,000. Furthermore, the cost of obtaining a degree has risen significantly, with the average graduate now leaving university owing £44,000 – more if they live in London. Graduate debt of £50,000 or more is not unheard of. A recent CISI survey finds at least 89% of financial services practitioners believe today’s students are paying too much for university (68% say the cost should be less than £20,000; a further 21% say that up to £40,000 is reasonable).

Extra income may be cancelled out by increased debt

Increased debt means there is no ‘average premium’; because the £100,000 gain is a lifetime premium. To calculate an annual gain you need to spread the £100,000 over 40 years. This means it is £2,500 a year on a gross basis. However, students who started their course from September 2012, some of whom are leaving now with £50,000 debt, have to pay interest at RPI+3%, which is 4%, and equates to an interest charge of £2,000 per annum – therefore almost entirely cancelling out the extra income earned by having a degree.

But averages can be misleading. There are three key factors that determine whether an individual will be an economic winner or a loser. They are, according to Graduates’ Prospects, in order of relevance:

  • the subject studied
  • the type of degree awarded
  • the institution at which they studied.

Using data from the Higher Education Statistics Agency, it is clear that the greater the vocational element of the subject studied, the greater the probability of the individual entering employment. Those studying business, maths, accounting, law and health will be economic winners. Those with an arts or humanities degree are likely to lose out financially.

The type of degree is also relevant, with a first class degree adding an additional 10% in salary terms, over those who have a third or a pass, while a 2:1 receives a 4% premium.

Where a student studies also has an effect. Studying at one of the prestigious Russell Group of universities adds about 10% to the salary and provides the individual with higher employment prospects.

Too much supply and not enough demand

Today’s graduates have a tough time and not enough of them are working in roles which make use of their skills. There is too much supply and not enough demand.

Over 54% of those who enter the workforce are graduates, but as the Chartered Institute of Personnel and Development reported in August 2015, over 60% of graduates are working in non-graduate roles. There are simply not enough graduate jobs, which is why too many graduates are either serving coffee at Starbucks (or the equivalent) or have entered the employment market in jobs for which they are overqualified. Meanwhile, according to an NUS survey in March 2016, over half (52%) of graduates aged under 25 were living back with their parents or guardians seven months after graduation.

Therefore, many aspiring students – and their parents – should be, and are, asking themselves if a degree is worth it.   

The answer may be politically incorrect and unwelcome, but if a key reason for an individual wanting to take a degree is to get ahead, then unless they are studying a relevant, career-related qualification at a top university, and expect to obtain a 2:1 or better, then they would be well advised to take a gap year travelling and then enter the industry of their choice.

If this industry is finance, then taking the CISI professional qualifications, either as an apprentice (a number of CISI  qualifications can be taken as part of level 2–6 apprenticeships in banking and financial services, with government funding available to employers), or as a school leaver, will equip them with highly relevant and practical skills that are valued by employers.

These individuals will gain an advantage over graduates by having three years’ earnings and additional experience, greater employability, no millstone of debt and the practical key skills and qualifications needed to succeed.

Apply for apprenticeships at or 


Currently CISI qualifications can be taken as part of an Apprenticeship in Providing Financial Services. However, the CISI has been working with employers to develop new standards for apprenticeships and, from October, CISI qualifications will also be available as units within the following apprenticeship standards:

  • Financial Services Administrator
  • Investment Operations Support
  • Investment Operations Technician
  • Investment Operations Specialist
  • Relationship Manager, Banking

Contact for more information.

[1] National Institute Economic Review, July 2005


Published: 17 Aug 2016
  • The Review
  • Opinion
  • City View

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