The expansion of university education has reduced the value of some degrees to zero, as more young people join the workforce as graduates, research suggests. Recent male graduates in arts and humanities are earning no more than those who left education after A levels, a study from the Institute of Education has found.

The results will add to pressure from universities to be allowed to set student tuition fees according to how much a degree subject is valued by employers. At present the majority of universities charge £3,000 a year, the maximum permitted by the Government. Research universities have pressed for a minimum of £6,000.

The research also calls into question the Government’s long-term aim of increasing university participation to 50 per cent of the adult population, up from 43 per cent at present.

Anna Vignoles, Reader in Economics of Education in the department of economic, social and human development at the Institute of Education, who led the study, said that a university degree still had a high value in the labour market. However, a surplus of graduates in some nonscientific subjects could mean that those with degrees in the arts or humanities may soon find that they are not able to earn enough to compensate for the amount that they paid for their university education.

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“New graduates in these subject areas are earning similar amounts to those with just A levels,” she said. “Some graduates in highly valued subjects, such as accountancy, will continue to profit from the amount they spent on their degrees. But others may gain only a small, or even a nil, return to their investment in higher education.” She added that graduates in arts and humanities subjects, such as history, art, French or English literature, had among the lowest earnings.

Accountancy graduates were earning at least 40 per cent more than them over the course of a lifetime. Dr Vignoles, who will present her findings to the annual conference of the British Educational Research Association in London today, suggested that tuition fees should vary according to subject and institution in order to make students realise what different subjects are worth.

The study draws together a number of research papers into the subject, notably a study of graduate earnings by Professor Peter Sloane and Dr Nigel O’Leary at Swansea University. Dr Vignoles’s findings follow earlier research by PricewaterhouseCoopers (PWC), the consultant, which found that the average university leaver can expect to make £160,000 more between the age of 21 and 60 than those who enter the job market with only A levels. Those with degrees in medicine have the highest earnings premium at £340,315, engineering graduates can expect to make £243,730 more, while those with degrees in geography or history make £51,549 more.

But the PWC report also found that with government grants, bursaries, low interest rates and long repayments, graduates could still expect an average financial return on their investment in their degree of 13.2 per cent a year. Bill Rammell, the Minister for Higher Education, said that despite the expansion of higher education, the financial returns to graduates were high by international standards.

“Independent analysis suggests the average premium over a working life remains comfortably over £100,000 (before tax) in today’s valuation,” he said. “I’m glad that potential students are increasingly aware of their likely earnings when choosing a course, but it’s also right that they consider the wider nonfinancial benefits like job satisfaction.”

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