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Aston Graduate Average Salaries

THE Conservative-Lib Dem coalition formed in 2010 wanted universities to expand. Much to the chagrin of thousands of youngsters, it got its way in 2012 by nearly trebling the tuition-fee ceiling to £9,000 ($14,000) a year. With students shouldering the bulk of the cost of teaching at universities, the government was able to remove the cap on the numbers that universities were allowed to accept. An additional benefit of the shift, hoped officials, was that increased competition for students should drive up standards.

So far competition has not had that desired effect. Most universities charge the maximum, and there has been little change in the quality of teaching. In a bid to ensure that students and taxpayers get better value for money, the government has created a ranking, the “Teaching Excellence Framework” (TEF), which tries to categorise universities by their teaching quality, not their reputation. It hopes to be able to link the fees that universities may charge to instruction.

One way to measure a university’s impact is to look at earnings data, which the government also hopes to include in future versions of the TEF. On June 13th the Department for Education released the latest wave of its “longitudinal education outcomes” data, which analyse tax returns to show how much people earn five years after they graduate. To find out which factors are most relevant, The Economisthas analysed the data and created a ranking that compares graduates’ wages with how much they would have been expected to earn regardless of their university.

Our estimate of expected earnings is built from a statistical model that predicts wages based on the subjects people study, their exam results at school, age, family income, whether they went to private or state school and where the university was located. The difference between the predicted and actual amounts that students earn ought to reflect a university’s impact on graduate wages. Our analysis measures how well universities perform compared with the average institution, and is blind to their prestige.

Wait, what about Oxbridge?

The rankings have their flaws. They are based on a single cohort of graduates, who left university in 2009 in the middle of a financial crisis. Using median earnings as a measure understates how much variability there is in graduates’ incomes, especially at the top. Nevertheless, the data offer a glimpse of which universities do most to boost earnings. Those at the top are a mix of the illustrious (Nottingham and Oxford) and the unfamiliar (Brunel and Robert Gordon)—see rankings table below.

Most of the differences in median earnings can be explained by just two factors: how selective a university is and what subjects their students choose to study there. Once these are accounted for, graduates’ wages are remarkably predictable. Differences in entry tariffs, as defined by UCAS points mostly earned in exams taken at 18, account for nearly 70% of the variation in median earnings. Swots from Cambridge, the most selective university in Britain, earn almost £40,000 a year on average five years after graduating. Their peers at Bedfordshire, the country’s least-selective institution, make only half as much.

Subjects which include some element of maths are well-rewarded. Our analysis finds that the five fields with the highest salaries are medicine, veterinary science, economics, engineering and mathematics. By contrast, creative arts, agriculture and communications graduates earn the least. There is a big difference between top earners and poorer ones. After half a decade, medicine and dentistry graduates earn £47,000 a year on average; creative-arts graduates just £20,000.

Encouraging more students to sign up for maths-related degrees may be hard. One problem is that schools in Britain produce few maths whizzes compared with those in other countries, says Anna Vignoles, an economist at Cambridge. Portsmouth, which tops our rankings, provides remedial maths and literacy catch-ups for those needing them. Another difficulty is that universities are not allowed to vary their prices by subject, which means they have little incentive to nudge students towards courses like engineering or science, since it is cheaper to teach the humanities.


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