Is it financially worth going to college? New data says yes
Higher qualifications attract a significant earnings premium
Graduates with a PhD or doctoral degree earned the most within a year of qualification (€710 per week), followed by master’s (€560), honours degree (€475), ordinary degree (€380) and advanced certificate (€285).
Going to college is a costly business. There’s the €3,000 registration fee, not to mind the eye-watering cost of accommodation.
Some college graduates struggle to find work. Others accept jobs for which they feel overqualified. Quite a few end up dropping out of their courses.
As the economy nears full employment, some quite rightly ask whether a college education is still worth it?
A new study, which has tracked the earnings of more than 300,000 college graduates between 2012 and 2016 using their PAYE records, seems to answer the question quite clearly.
Going to college, for most, is well worth it. And the higher your level of qualification, the higher your earnings premium.
For example, graduates with a PhD or doctoral degree earned the most within a year of qualification (€710 per week), followed by master’s (€560), honours degree (€475), ordinary degree (€380) and advanced certificate (€285).
However, it may be questionable whether lower levels of qualifications – such as advanced certificates, also known as level-six courses – are really worth the cost.
It’s of little surprise to find that earnings vary significantly for graduates depending on the type of course they completed.
Over recent years, education graduates have tended to earn most in the first year after college, followed by health and welfare. They also have the highest proportions of graduates in work.
Tech and engineering
However, the slower rate of salary increase in these sectors means they are quickly outstripped by graduates from areas such as tech and engineering.
Within five years of leaving college, for example, information and communication technology graduates were the highest earners (on €815 a week), followed by engineering (€730), health and welfare (€710), science (€705), education (€695) and business/law (€685).
By contrast, the lowest earners had qualifications in services (€530 a week), arts and humanities (€585), agriculture and veterinary (€610), and social sciences and journalism (€645).
Despite high earnings on offer in the sector, many tech firms say they are facing acute skills shortages and relatively few school-leavers are choosing courses in this area.
In fact, the most popular industries for new graduates in 2016 were wholesale and retail, followed by health, science and education.
While the figures show there is an earnings premium for the highest levels of qualification, the proportion of students opting to complete postgraduate studies is falling.
While about one in four graduates re-enrolled in higher education in 2016, this is down from one in three in 2010.
This is most likely a result of the improved job opportunities in the workplace. In many sectors, graduates are being hired before they leave college. By contrast, during the recession when jobs were scarcer, a postgraduate course was often seem as a way of riding out the economic storm.
Almost 80 per cent of 2016 graduates were in employment in the first year after graduation, compared to 65 per cent of 2010.
Graduates are also earning more, with weekly median earnings for 2016 graduates at €475 a week, compared to €420 in 2010.
This latest study also examined outcomes for graduates of further education and apprenticeships.
It is hard to neatly compare these with the higher education figures, as they don’t include earnings.
However, they do show that, for many, the further education sector is a stepping stone to further study.
Some 30 per cent of 2016 graduates from further education progressed to higher education, while 38 per cent were re-enrolled in another further education course within a year.
The study also shows employment prospects for apprenticeships have improved significantly over recent years.
While more than half of apprentices who qualified in 2010 were in employment two years after qualification, this rose to 80 per cent for apprentices qualified in 2014.
It would be interesting to compare their earnings to college graduates, but we don’t have that data. Anecdotally, however, many apprentices are on salaries that compare very well with third-level graduates.