The £45,600 Question: Does Having a Degree Pay Off?

 

Imagine signing a £45,000 contract hoping it pays dividends in the future, with no guarantee that it will. Sounds like a gamble, right? That’s the reality for today’s students. Degrees don’t come with a promise of payoff, yet many take the plunge blindly.

The truth is, while some degrees open doors to high salaries, others barely nudge the needle. Yet students often assume all degrees are equal. Why? Because they don’t know better. That’s where asymmetric information comes in – universities know which degrees are worth more; students don’t.

A concept in economics, asymmetric information means one side knows more than the other. Here, it’s the institutions holding the cards, not the students. And it matters. A mismatch in expectations can leave young people underestimating how hard it will be to repay their loans.

A 2014 Brookings study (Akers and Chingos) found nearly 1 in 5 U.S. students underestimated their student loan balance by $5,000 to $6,000. That's a huge blind spot. And has anything changed a decade later?

Our own survey suggests not. When we asked students how long they think it will take to repay their debt, most said less than 10 years.

But government stats (Department for Education, 2023) say the average repayment time is closer to 30 years. Clearly, many students are still entering the system with unrealistic expectations.

This kind of misunderstanding doesn’t just affect finances. It influences life choices: where people work, how soon they can move out, when they start families. Believing your debt will disappear in a few years might be comforting, but it can set you up for future struggles.

Is a Degree Still Worth It?

It depends. In 2023, the median salary for working-age graduates was £40,000. That’s better than the £29,500 earned by non-graduates, but not always enough to justify debts over £50,000. Especially when you add rising tuition and living costs.

University fees alone are set to increase to £9,535 per year by 2025/26. Add three years of rent, food, books, and travel, and you’re looking at a bill few fully grasp when they apply. Apprenticeships and other routes might offer a better return for some, especially in hands-on fields.

Loan Repayment Realities

Under Plan 2, graduates earning above £27,295 repay 9% of anything they earn over that. Under Plan 5 (for new students), the threshold drops to £21,000 – and repayment stretches 40 years.

Translation: students repay more, for longer, and start sooner. Even with inflation adjustments, this change is likely to increase the number of graduates who repay their loans in full, but it also spreads the burden across more of their working lives.

Graduates who don’t hit high earnings won’t repay everything. But they will still make payments for decades, possibly without clearing the debt. In that case, the cost becomes less about the total and more about the long-term deduction from monthly pay.

The Graduate Premium

Higher education still brings benefits. Postgraduates earn the most, followed by graduates, then non-graduates. From 2007 to 2023, graduates saw wages rise from £30,000 to £40,000. Non-grads started lower and stayed lower.

But the advantage isn't equal across fields. Some degrees are golden tickets; others, not so much.

Not All Degrees Are Created Equal

STEM, law, and finance still offer high returns. But in arts, marketing, and humanities, employers care more about what you can do than what it says on your diploma. According to our survey of students only 24% are considering a master’s, while 44% said ‘no thanks’, and the rest are on the fence.

 

Today, experience and certifications often matter more. Employers are asking: can you do the job? Not: do you have a degree?

Alternative credentials like Google Certificates, coding bootcamps, or professional exams (like the CFA or ACCA) are becoming more valuable. In some industries, these may carry more weight than a traditional degree.

The Signal Is Fading

Once, a degree was a clear signal to employers: "I’m qualified." Now? With AI tools, grade inflation, and remote learning, that signal is blurrier. Our final survey question asked students how reliant they are on AI to help with their degree work. According to our own survey, 23.3% of respondents rely heavily on AI Tools to write code, summarise research, and much more.

When employers can’t tell who’s genuinely capable, a degree alone may not be enough. Hiring becomes a gamble, and in a competitive market, employers are looking for safe bets—people who can prove their ability with real-world skills.

 

 

 

 

Final Thought

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So, does a degree pay off? Sometimes. But it depends on what you study, what you do with it, and how well you understand the game. The real risk? Walking in blind. Because when the stakes are £45,600 and counting, students can’t afford ignorance.

Make the investment count by asking the tough questions before you apply: What will this degree get me? What are the alternatives? And how will I prove I’m more than just a piece of paper?

Bibliography

Akers, B. and Chingos, M.M. (2014) Are college students borrowing blindly? Washington, D.C.: The Brookings Institution. Available at: Are-College-Students-Borrowing-Blindly_Dec-2014.pdf (Accessed: 23.03.2025)

Department for Education (2023) Student loans in England: Financial year 2023-24. Available at: https://assets.publishing.service.gov.uk/media/6672d55831a88528d2da7e2c/slcsp012024.pdf (Accessed: 24.03.2025)

BBC News (n.d.) Tuition fees: How much does university cost in the UK? Available at:   https://www.bbc.co.uk/news/education-62237170  (Accessed: [20.03.2025])

GOV.UK (n.d.) Graduate labour market statistics: Calendar year 2023. Available at: https://explore-education-statistics.service.gov.uk/find-statistics/graduate-labour-markets (Accessed: [20.03.2025])

GOV.UK (n.d.) Repaying your student loan: How much you repay. Available at: https://www.gov.uk/repaying-your-student-loan  (Accessed: [21.03.2025])

Statista (2023) Annual salary of graduates in England 2023. Available at: https://www.statista.com/statistics/1191970/annual-salary-of-graduates-in-england/ (Accessed: [20.03.2025])