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Do Graduates Earn More Over Their Lifetime Than Apprentices?

Do graduates earn more?

The BBC website recently reported on a paper by the Intergenerational Foundation stating that “Successive governments have used the graduate “pay premium” to justify the continual increases in University fees. (http://www.bbc.co.uk/news/education-36916009 )

This “premium” is the amount of extra money it is estimated a degree can help graduates to earn over the course of a lifetime. The report says that in 2002, ministers put it at £400,000, but recent estimates have been more modest at about £100,000.”

It goes on to say that:

“Our research proves that the current £100,000 graduate earnings premium so often touted equates to an ‘annual bonus’ of just £2,222 over 45 years of work and is wiped out once National Insurance and income tax are taken into account. Furthermore, the premium is simply not enough to cover the interest accruing on the average loan.”


The authors say a graduate who borrowed the maximum for tuition fees and maintenance would, with interest, owe £53,000 after three years.

If unpaid for the full 30 years before being written off and if bank rates follow the pattern of the previous 30 years, the debt would reach £282,420, they calculate.

In addition, unlike most ordinary loan agreements, the terms and conditions of student loans can be changed “at any moment without debate and without notice”, they add.

Why go to Uni?

There are many reasons for choosing to go to Uni. For some professions it is the required entry route. However this is no longer the case for careers in Accountancy – and from this research, the economic case for it now seems very doubtful.

  • Apprenticeships therefore provide an excellent alternative for bright school leavers. They also have the added benefit for employers of:
  • Attracting government funding to support the cost of apprenticeship training (fully funded for those aged 16-18)
  • No NIC contributions for apprentices aged under 25 on earnings up to the Upper Earnings Limit
  • The possibility of an AGE grant of £1,500 for small employers (less than 50 staff) employing an apprentice for the first time in a 12 month period.
  • Attracting some very able school leavers with A level results that would have achieved access to Uni and who are extremely motivated and practical.
  • The study skills acquired during “A” levels are probably more suited to the early years of professional studies than those acquired during a degree

Therefore Apprenticeships appear to offer an excellent route to an accounting qualification for both students and employers.

If you would like to know more about our AAT Apprenticeship programme, you can find more information here.