Sunday, May 16, 2010

Value of College Education

A study of Graduate earnings in Britain indicates that going to the university indeed pays. Neil Faulkner makes the point in the Yahoo! Finance article, which can be accessed here.

I shall quote a few interesting bits of statistic from the article.

For example, consider this list of highest paying subject areas:

Subject studied

Average extra earnings (compared to non-graduates)

Medicine

£340,000

Law

£245,000

Engineering

£245,000

Maths

£240,000

Physics

£190,000

Chemistry

£185,000

Business

£185,000

European languages

£165,000

Psychology

£100,000

Linguistics and English

£95,000

Humanities

£50,000

Arts

£35,000


This is, of course, the 'lifetime' premium of a degree, which is quite modest for some of the subjects at the bottom of that list.

The top order has few surprises, though Chemistry graduates earning more than Business Graduates is interesting, particularly considering many university Chemistry departments are struggling.

The other interesting statistic is the comparison of Annual earning of graduates versus non-graduates, which reads like this:

Age in 2008

Degree or equivalent

A-level, GCE or equivalent

21-22

£17,472

£15,912

23-24

£20,696

£18,200

25-26

£24,960

£20,436

27-28

£28,912

£22,256

29-30

£32,916

£24,180

31-32

£34,632

£24,336

32-33

£37,960

£27,768

All ages (21 -34)

£28,860

£21,268



So, it seems that by the time one reaches 30 years of age, the graduation premium peaks. This is quite a considerable difference in salary, over £10,000 annually, roughly 40% on the basis of non-graduate salary.

Another interesting statistic, quoted in the same article, the rate of return of graduate degrees, and here, law comes at the top.

Subject

Rate of return

Law

17.2%

Management

16.9%

Engineering

15.5%

Chemistry

15.0%

Physics

14.9%

European languages

14.0%

Medicine (excluding dentistry)

11.6%

Chemical sciences

10.2%

Psychology

10.1%

Linguistics and English

9.7%

History

8.8%


In this list, management fares well too.

But, the sobering bit, particularly for lifelong learners, comes now. There is hardly any Post-Graduation premium. Not all employers, and I must add from experience, the SME employers in particular, are ready to pay a premium for Post-Graduation. Those who pay a Post-Graduate premium, may pay upto £6,000 extra a year for a Ph D or £4,000 for a Masters degree. The study reports that very few employers actually pays a premium for MBA, but those who pay, may pay upto £12,000 a year [investment banks, surely].

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