The Value of Higher Education: A Cost-Benefit Analysis
The True Value of a Degree
Beyond the paycheque: Quantifying the lifetime monetary, health, and societal benefits of higher education against the cost of study.
While the cost of higher education is often discussed in terms of debt and tuition fees, the return on investment extends far beyond graduate salaries. Recent analysis allows us to monetise the "hidden" benefits—from reduced pressure on the NHS to increased personal wellbeing—creating a holistic picture of a degree's value to both the individual and society.
The Lifetime Cost-Benefit Analysis
Comparing the estimated direct cost of a 3-year degree vs. the aggregated lifetime value (Monetary + Non-Monetary).
NHS Savings
Graduates utilise fewer public healthcare resources. Analysis suggests moving from intermediate to degree-level education is associated with a ~16% reduction in public healthcare costs.
£90 / year
Savings per person in direct treatment costs
The 'WELLBY' Value
Higher education correlates with higher life satisfaction. HM Treasury guidance values one "WELLBY" (a one-point change in life satisfaction for one year) at substantial monetary worth.
£13,000
Monetary value of one WELLBY (2019 prices)
Exchequer Benefit
Even after accounting for the costs of funding education, the state receives a massive return on investment through higher tax receipts and lower benefit payments from graduates.
£75,000
Net benefit to the Exchequer per graduate
Societal Safety & Crime Reduction
A BIS synthesis of evidence indicates that higher education participation contributes significantly to lower crime rates. A 16 percentage point increase in the proportion of the population educated to degree level is estimated to generate over £1 billion in annual savings in reduced crime costs across the UK.
£1.3 Billion
Estimated annual savings in wider societal benefits (lower estimate)
Civic Participation
Higher engagement in democratic processes and community volunteering
Methodology & Sources
Cost Assumptions: "Total Direct Cost" (~£65,000) comprises average tuition fees for a 3-year course in England (~£27,750) plus estimated maintenance/living costs over three years (~£37,000) [@ImmerseEducation2025Costs].
Private Benefit: "Individual Net Earnings" (~£115,000) represents the average net lifetime earnings premium for men and women after taxes and student loan repayments, based on IFS estimates [@IFS2020LifetimeEarnings].
Societal Benefit: "Public/Exchequer Benefit" (~£75,000) is derived from London Economics/Universities UK analysis of tax revenues and benefit savings [@LondonEconomics2024EconomicImpact].
Non-Monetary Valuations: "Health Savings" (~£3,600) is a lifetime projection based on the £90/year estimated reduction in NHS costs [@DavillasPudney2019BaselineHealth]. "Wellbeing Value" (~£26,000) illustrates a hypothetical sustained 0.05-point increase in life satisfaction over 40 years, valued at £13,000 per WELLBY [@HMT2021WellbeingGuidance].
References
- @techreport{DavillasPudney2019BaselineHealth, author = {Davillas, Apostolos and Pudney, Stephen}, title = {Baseline Health and Public Healthcare Costs Five Years On}, institution = {Institute for Social and Economic Research}, year = {2019}, url = {https://www.iser.essex.ac.uk/wp-content/uploads/files/working-papers/iser/2019-01.pdf} }
- @online{IFS2020LifetimeEarnings, author = {{Institute for Fiscal Studies}}, title = {The impact of undergraduate degrees on lifetime earnings}, year = {2020}, url = {https://ifs.org.uk/publications/impact-undergraduate-degrees-lifetime-earnings} }
- @online{HMT2021WellbeingGuidance, author = {{HM Treasury}}, title = {Wellbeing Guidance for Appraisal: Supplementary Green Book Guidance}, year = {2021}, url = {https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1005388/Wellbeing_guidance_for_appraisal_-_supplementary_Green_Book_guidance.pdf} }
- @techreport{LondonEconomics2024EconomicImpact, author = {{London Economics}}, title = {The economic impact of higher education teaching, research and innovation}, institution = {Universities UK}, year = {2024}, url = {https://www.universitiesuk.ac.uk/what-we-do/policy-and-research/publications/economic-impact-higher-education} }
- @online{ImmerseEducation2025Costs, author = {{Immerse Education}}, title = {How Much Does University Cost in the UK?}, year = {2025}, url = {https://www.immerse.education/resources-for-parents/finance-and-loans/how-much-does-university-cost-in-the-uk/} }