Education Fee Planning: Is A University Degree Worth The Cost?

Higher education has become one of life's largest expenditures, and costs have risen far faster than inflation over the past two decades. For home students in England today, tuition fees of £9,790 per year, combined with accommodation, living costs, and day-to-day expenses, mean that a three-year degree can leave graduates with total debt well in excess of £50,000. Fees for international students are significantly higher. 

The picture is similar - and in many cases considerably more expensive - elsewhere in the world, including in the US, Australia, and Canada.  Faced with costs of tens of thousands, it is entirely understandable that parents begin to wonder whether they might be better off encouraging their children to skip further education and go straight into the job market. Yet the evidence consistently suggests otherwise, with certain caveats.

New research in the UK published by the Institute for Fiscal Studies and commissioned by the Department for Education offers the most detailed picture yet of the financial return to a university education. The IFS estimates that graduates will earn around 20% more on average over their lives as a direct result of their degree.

According to the study, even once taxes and student loan repayments are factored in, ‘expected returns remain large and positive’ – over £400,000 for the highest earners, namely those graduating with degrees in medicine and economics. 

These are not figures that can easily be dismissed. Even after the full cost of the degree - fees, lost earnings during study, and subsequent loan repayments - is taken into account, the majority of graduates come out significantly ahead.

One of the most important findings from the new IFS research is that the graduate earnings premium is not static - it builds over a career. Tracking a cohort of English school pupils through to age 37, the IFS found that by their mid-thirties, male graduates were earning 28% more at the median than men who had not attended university. For women, the gap was even more striking, at 56%. These are not entry-level salary differentials - they are the returns on a degree as it compounds through the years of peak career development.

This is a crucial point for families weighing up the upfront cost. The return on a degree is not fully visible at 22 - or even at 30. It continues to accumulate well into mid-career, which means the true value of the investment is often underestimated by those looking only at early salary figures.

The earnings advantage of a degree also has a multiplier effect. Higher graduate salaries create greater capacity to save and invest - and those investments generate returns of their own. Over a working lifetime, this compounding effect means the financial gap between graduates and non-graduates tends to widen well beyond what the earnings figures alone would suggest.

The research is careful to highlight that these are averages, and that significant variation exists. Around a quarter of graduates can expect to be financially worse off over their lifetime as a result of attending university, and for men with lower prior attainment, that proportion is even higher.

Subject choice matters enormously. Students of medicine and law achieve very high returns on average, while some of those studying creative arts will gain less financially from their degrees. This does not mean creative degrees lack value - graduates in the arts contribute significantly to the creative industries, which remain a major driver of the UK economy. But it does mean that the financial case for university is not automatic, and the decision deserves proper scrutiny.

No honest discussion of the value of a degree in 2026 can avoid the question of artificial intelligence. Since the launch of ChatGPT in late 2022, AI has transformed areas as diverse as healthcare, finance, education and entertainment, and the pace of change shows no signs of slowing. Roles from financial analysts to translators are being reshaped or replaced, and some commentators have suggested that more highly educated workers may be among those most at risk.

Yet the evidence points in a more encouraging direction for graduates. The skills that higher education develops - critical thinking, creativity, emotional intelligence, adaptability and complex problem-solving - are precisely those that AI currently struggles to replicate. A language graduate, for example, may find that straightforward translation work has migrated to machines, but their cultural expertise and ability to navigate nuance remains genuinely valuable and difficult to automate.

The practical advice for students and their parents is not to avoid university, but to choose thoughtfully. Fields such as data science, cybersecurity, healthcare and engineering are likely to remain in strong demand. Across all subjects, the ability to work alongside AI tools - rather than being displaced by them - is becoming an increasingly important part of graduate employability.

The financial return matters - but it has never been the whole story. The non-financial benefits are also wide-ranging. Research has consistently shown that graduates enjoy higher levels of job satisfaction, better health outcomes, and longer life expectancy than non-graduates. They are more likely to be employed, more likely to advance quickly within their careers, and better placed to weather economic downturns. 

The experience of university itself - building independence, expanding networks, and spending several years studying something that genuinely matters - carries value that does not appear in any lifetime earnings model.

For families who have decided that university is the right path, the question shifts from whether it is worth it to how best to plan for it. The single most important factor is starting early. A regular savings or investment strategy put in place when a child is young can make a material difference to how much debt they carry into their working life - and therefore how quickly the net benefit of their degree is actually felt.

The power of compound growth means that even modest monthly contributions, begun early enough, can build into a meaningful education fund by the time fees fall due. The earlier families act, the more of the heavy lifting is done by investment growth rather than contributions alone.

Taking professional financial advice at an early stage helps families understand what they are actually planning for - the likely total cost of fees, living expenses and everything in between - and choose savings and investment vehicles that work efficiently for their particular circumstances. If you haven’t yet started planning, it’s still not too late, and consulting an adviser is useful at any point in the journey, even if your child is heading to university imminently.

In spite of the inexorable march of AI, a degree remains for most people the best possible route to a rewarding and financially secure career. But with costs rising across the UK, the US, Australia, Canada and beyond, it’s essential to integrate education fee planning in your overall financial plan. 

Hoxton Wealth provides professional advice on education fee planning for expatriate families around the globe. We have helped hundreds of parents build dedicated savings and investment strategies to cover university fees and living costs - enabling their children to graduate debt-free and career-ready and giving them the best possible start in life. 

Whether your child is still in primary school or approaching the final years of secondary education, it is never too early - or too late - to put a plan in place. Contact us today  to discuss an education fee plan tailored to your needs, your budget, and your existing financial plan, wherever in the world you are based.