Education: Negative Graduating Premiums?

I have been studying what are called "negative graduating premiums" — a phrase I first encountered in the United Kingdom. The concept compares the incomes of those who pursue degrees with those who learn a trade or skill through other routes. Which group fares better in the short term? In the long term? When graduates earn less than their trade-skilled counterparts, that is a negative graduating premium. In simple terms, it describes educational investments that do not yield commensurate returns.

How much more can you earn with your degree doing the same job someone without one can do? If that person earns the same or more, then the degree's market value — at least for that role — is questionable.

Not all degrees are equal. Fees differ, and so do the demands of each institution. Graduates from certain universities can say they went through enormous pressure to earn that qualification. The intended payoff was that the job market would recognise and reward all that investment. But this is not always the case.

A degree costs a premium and does not always guarantee a premium outcome. In my book, What the Future Knows About the Past, I write about the burden of skipping a degree — and the burden of pursuing one without thinking it through. In many countries, the default goal is to get a degree in anything. Yet reports consistently show that graduates in a number of fields — particularly some of the Arts — carry the largest negative graduating premiums.

The weight of student debt.

Far from being the only issue, higher education funding needs attention across the board.

In the United Kingdom, graduates with student loans carry significant debt — in England, average balances have historically been roughly double those in Wales, Scotland, and Northern Ireland. With billions lent to students each year, the outstanding total is substantial for the size of the economy. In Africa, Asia, and parts of the world where student loans are difficult to obtain, families often sell property or turn to wealthier relatives to fund education.

In the United States, student debt exceeds the estimated total credit card debt — people owe more for education than for consumer spending ¹. Debt forgiveness programmes have been proposed and partially enacted, but regardless of whether these loans are forgiven, the underlying question remains: which career paths genuinely require those degrees, and which do not?

Do you need a degree in Computer Engineering?

While many jobs specifically require a computer engineering degree, many do not and instead rely on experience and the quality of past projects. To spend years in formal education only to compete with someone who attended a coding bootcamp is a difficult reality. But the question extends beyond tech. To properly understand negative graduating premiums, you must also look at the earning power of those who entered trades early — construction, plumbing, welding, and electrical work. Many of them earn on a par with graduates and, in some situations, out-earn them.

The answer is not that degrees are worthless. The truth is that not all degrees should be considered investments. Understanding the return — financial, professional, and personal — before committing is part of thinking clearly about the future.

In What the Future Knows About the Past, I explore this tension in depth: how to weigh the value of formal education against the value of time, experience, and early career entry. The goal is not to discourage education. It is to encourage intentional decisions about it.

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