Assessing the economic returns to Level 4 and 5 STEM-based qualifications – July 2019

Practice area: Economics of Education | Education and Labour Markets | Labour markets
Client: Gatsby Foundation
Published: 16 July, 2019
Keywords: quantitative analysis

London Economics were commissioned by the Gatsby Foundation to undertake an assessment of the net graduate premium and net Exchequer benefit associated with Higher Technical Education qualifications at Level 4 and Level 5.

  • For full-time students, the analysis suggests that the net benefits to students undertaking specific STEM-based qualifications at Level 4/5 are substantial (and generally larger than the returns associated with non-STEM-based subjects). There are particularly high net graduate premiums achieved by males undertaking HNCs/HNDs in STEM-based subjects (£100,000 per student) and females undertaking HE Diplomas in STEM-based subjects (£57,000). The corresponding net benefits to undergraduate degree students in STEM-based subjects were estimated to be £166,000 and £106,000 for men and women, respectively.
  • The internal rates of return achieved by men undertaking STEM-based HNCs/HNDs (24.8%) and women completing STEM-based HE Diplomas (16.6%). These compare to an internal rate of return of 19.5% and 17.1% posted by men and women undertaking undergraduate degrees in STEM-based subjects.
  • Reflecting the general fact that part-time students tend to undertake their qualifications later in life, the net lifetime benefits accrued by these students are typically lower than the benefits to full-time students. However, again, we found that there are relatively high net graduate premiums accrued by men undertaking STEM-based HNCs/HNDs (£66,000 per student) and by women undertaking STEM-based HE Diplomas (£23,000). As with full-time students, these estimates are marginally smaller than the corresponding premium to undergraduate degree students in STEM-based subjects (£69,000 and £26,000 per male and female undergraduate student, respectively).
  • Again, there are very substantial rates of return accrued by males studying STEM-based HNC/HNDs (25.3%) and females undertaking STEM-based HE Diplomas (13.0%). This compares to internal rates of return to undergraduate degree level students in STEM-based subjects of 15.1% and 10.2% for men and women, respectively.

The full report is available here.