Research-led institutions give graduates pay premium

Earning potential is affected by type of university attended, a study claims. Melanie Newman reports

November 27, 2008

The salary "premium" enjoyed by graduates of research-intensive universities above the earnings of those from less-selective institutions has been revealed by new research.

A study from the 1994 Group of smaller research-intensive universities shows that attending an institution in the 1994 Group or the Russell Group of 20 large, research-led institutions increases earning potential across most subjects compared with other institutions.

The Graduate Employment and Earnings report used data from the Destination of Leavers from Higher Education Longitudinal Survey, which provides information on a 2002-03 cohort of graduates and the positions they hold three and a half years after graduating.

Three quarters of graduates of research-intensive universities were earning more than £20,000 after this time compared with 59 per cent of graduates from other institutions.

Science and technology students from the Russell and 1994 groups earned markedly higher salaries than other graduates. Almost a third (31.7 per cent) of graduates from these universities were earning between £30,000 and £50,000, compared with 16 per cent of other graduates.

Some 10 per cent of students who studied law at research-intensive institutions were earning less than £20,000 after three and a half years, compared with more than half of graduates from other institutions.

Graduates from research-intensive institutions were more likely to hold a graduate-level job and were likely to be happier retrospectively with their choice of university.

The report also drew on data from Opinionpanel's Higher Expectations Survey 2007-08, which asked new full-time undergraduates why they chose their institution.

When considering their earning potential, students at the 1994 and Russell groups attached more importance to their institution than the course studied, while students at other universities did the opposite.

Research from the Sutton Trust has shown that pupils from poor backgrounds are less likely to appreciate the differences between universities compared with their more advantaged peers.

A spokesperson for Million+, which represents post-92 institutions, said: "It is very important when examining the 'graduate premium' that the qualifications students enter institutions with are looked at to give a fuller picture of the situation. Where and how employers recruit graduates should also be considered in any analysis."

David Willetts, Shadow Universities Secretary, said: "When young people are borrowing money to study they are entitled to know what the financial returns are for particular courses at particular universities."

Anna Fazackerley, director of higher education at think-tank Policy Exchange, said: "The evidence that graduates of research-intensive universities are likely to earn more may be uncomfortable reading for many - but it has to be stomached."

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