A degree raises earnings by about half on average across the OECD — but for one graduate in five or more, it does not pay

The short answer: on average, yes. Across OECD countries in 2024, adults aged 25 to 64 with a tertiary degree earned 54% more than those whose education ended at upper secondary school, and in 2025 87% of them were in work against 78%¹. But the average is made of very different outcomes. The Institute for Fiscal Studies estimates that in England about 20% of women and 30% of men can expect a negative lifetime return from their degree once its costs are counted², and in the United States 42% of recent graduates work in jobs that do not need one³. The question worth asking is not whether degrees pay, but whether this degree, at this price, does.

The earnings premium, country by country

The OECD measures the premium as an index: the earnings of full-time, full-year workers aged 25 to 64 at each level of education, with upper secondary set to 100¹. On average a bachelor’s degree is worth 39% more and a master’s or doctorate 80% more, while those without upper secondary education earn 17% less¹.

The spread is the striking part. The premium is 25% or less in Denmark, Norway and Sweden and more than 100% in Chile, Colombia, Brazil and South Africa¹. In Chile a master’s or doctoral graduate earns 3.79 times what an upper-secondary worker does; in the United Kingdom, 1.49 times¹. The usual explanation is supply and pay-setting: where graduates are scarce relative to demand the premium is large, and where most young people already go to university and pay is compressed by collective bargaining, it is smaller. The United States sits high among rich countries, with tertiary graduates earning 70% more¹.

American labour statistics tell the same story at a finer grain. In 2025 the median full-time worker aged 25 or over with a bachelor’s degree earned $1,578 a week, against $966 with a high-school diploma — about 63% more — and $1,876 with a master’s degree⁴. Over a working life, Georgetown University’s Center on Education and the Workforce put median earnings at $2.8 million for a bachelor’s degree and $1.6 million for a high-school diploma, 75% more⁵.

Employment: the return people forget

A degree raises the chance of being in work at all. Across the OECD in 2025, 87% of tertiary-educated adults were employed, against 78% with upper secondary education and 60% below it; the rate rises with each level, from 86% for a bachelor’s to 90% for a master’s and 94% for a doctorate¹. In the United States the unemployment rate in 2025 was 2.8% for bachelor’s graduates and 4.3% for those with a high-school diploma⁴.

India is the exception in the OECD’s own tables. There, 64% of tertiary-educated adults were employed in 2025, against 67% of those with upper secondary education and 66% below it¹. The table does not say why, and the OECD publishes no Indian earnings premium to set beside it, so neither should be read as a verdict on Indian degrees. It is, though, a reminder that the international averages describe rich-country labour markets, and that a degree is a route to the jobs that need one only where such jobs exist in sufficient number.

Averages hide the spread: subject, institution and the job

The most detailed evidence is from England, where the IFS links graduates’ tax records to their degrees. Its 2026 estimate puts the average net lifetime return — the extra lifetime earnings a degree brings, after tax and student-loan repayments — at about £100,000, or 15%: £109,000 for men and £90,000 for women². The medians are lower, £60,000 for men and £67,000 for women, because a minority of very large returns pulls the average up². The same study finds about 20% of women and 30% of men can expect a negative return², and its average is about 30% lower than the IFS’s 2020 estimate of roughly £130,000 for men and £100,000 for women⁶.

• Subject. Medicine and economics return over £400,000 on average in England; creative arts, philosophy and languages return little or, for many, less than nothing². Across the OECD, STEM qualifications are most often linked to the highest earnings, and arts, humanities and education to the lowest⁷.
• The job it leads to. Among recent US graduates in 2024, 12.8% of nursing majors were underemployed, against 63.9% in the performing arts and 65.8% in criminal justice³. A degree that does not lead to a graduate job has a much smaller premium.
• Over-qualification. The OECD’s Survey of Adult Skills found about 23% of workers on average across the OECD are over-qualified for their job — 37% in England and 35% in Japan — and that being over-qualified carries a wage penalty of about 12% against equally skilled, well-matched workers⁸.
• Age. The premium grows across a career: 38% for 25-to-34-year-olds against 65% for 45-to-54-year-olds, OECD average¹. The return is back-loaded, while the cost — fees, debt and missed earnings — comes first.

Underemployment is not only a problem for weak subjects. In the United States in mid-2026, 33.7% of all college graduates aged 22 to 65 and about 42% of recent graduates aged 22 to 27 were in jobs that do not typically require a degree³. Yet even recent graduates earned a median $60,000 in 2025, against $40,000 for workers of the same age with only a high-school diploma³. Both facts are true at once: a degree raises expected pay, and a large share of graduates spend years in jobs that did not need it.

The cost side: fees, debt and years without earnings

A return is a premium minus a cost, and the cost has three parts. The first is tuition and living costs, which range from almost nothing at a German state university to tens of thousands a year for an international student in the United Kingdom, the United States or Canada — set out in what higher education costs by country. The second is debt and its interest, which works very differently in each country; see student debt systems compared. The third is the one most families leave out: three or four years of earnings a school leaver would have had.

Counting all three, the OECD estimated the private net financial return to tertiary education — lifetime gains minus costs, discounted at 2% a year — at USD 364,200 for a man and USD 300,900 for a woman on average in 2022, highest in the United States⁷. The figure is built on each country’s own typical costs for its own students. A family paying an international fee, or borrowing at a commercial rate, starts several years further behind, which is why the same degree can have a very different return for two students in the same lecture hall.

The public return, and why home students pay less

Graduates pay more tax over a lifetime, so governments gain too. The OECD put the average public net financial return to tertiary education at about USD 127,000 for a man and USD 60,600 for a woman in its most recent estimate⁹. In England the IFS estimates the Exchequer gains £107,000 per male and £48,000 per female graduate on average, but makes a loss on about 40% of degrees once unpaid student loans are counted². That public gain is the argument for subsidising home students — and it is why an international student, whose taxes will mostly be paid elsewhere, is charged the full cost.

How to weigh it for your family

1. Start from the subject and the kind of job it leads to, not the institution’s name. In the English data, the average return ranges from close to zero or below for some subjects to over £400,000 for others².
2. Price the whole cost: fees, living costs, the interest on any loan and the years of earnings forgone.
3. Compare the premium in the country where the graduate is likely to work, not where the degree is earned — the premium in the Nordic countries is a quarter or less of Chile’s¹.
4. Treat the average as the middle of a range. Plan for the degree paying off later than hoped, or not at all, and see whether the household can carry that.
5. Put the cost into the same plan as everything else, so it competes honestly with your own independence — the trade-off is set out in your child’s education or your independence.