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Graduate premium 'just 100,000'

8 December 09 12:27 GMT

Graduates can expect to earn £100,000 more over their working life than those without a degree, says the chair of the review into university fees in England.

The figure given by Lord Browne is a quarter of what the government claimed was the graduate premium when tuition fees were raised to £3,000 per year.

Lord Browne's lower figure projects increased earnings after taxation.

The Department for Business, Innovation and Skills denies that the financial advantage from a degree has decreased.

Lord Browne of Madingley made the comments in a document calling for evidence for the inquiry into how much students should pay in tuition fees and how universities should be funded.

'Not diminished'

"Graduates, on average, earn £100,000 more over their working life net of taxation than an individual whose highest qualification is two or more A-levels," said the inquiry document.

But he does add that graduates are more likely to be rewarded in other ways like living healthier lives, being in work and being less likely to smoke.

This figure is much lower than the £400,000 jobs-market advantage that was claimed for graduates in 2003, in the run up to increasing tuition fees.

In 2007, a study by PricewaterhouseCoopers for Universities UK produced another figure - an average of £160,000 over a working life. But behind this average there were wide differences - with £340,000 extra gained in medicine, while arts graduates could only expect £34,000.

The Department for Business, Innovation and Skills spokeswoman insisted the graduate earnings premium had not diminished and that there were many ways of calculating the financial benefits of a university education.

She said the £400,000 figure was an average based on a comparison with the earnings of the general population, rather than those with two A-levels and did not account for certain economic indicators like rates of interest.

There was no reason why the result would not be the same today if the same calculations were done, she suggested.

It was just that the department had found more robust ways of calculating the financial benefits of a university education, she added.

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