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Datablog

How large is a £21,000 annual salary?

The change in the way that universities are financed in the UK is not a new topic, yet one thing I found frustrating was the lack of context around some of the figures. One particular figure was the wage at which you would have to start paying back student loans: an annual salary of £21,000. For instance, if you came from the poorest 20% of the UK, and didn’t leave that demographic having taken the risk of going to university, would you have to start paying back your loans?

A good place to start to look is employment wages, here it shows that £21,000 a year (which comes to £402.47 a week*) is actually around the median wage (£404.30), so at that rate you have a higher salary than close to half of that which people earn in the UK through employment wages.

Source: Annual Survey of Hours and Earnings, Office for National Statistics.

A better analysis would be a comparison of wages from those who have a different set of qualifications and are at different stages of their lives. For instance, how long does it take (on average) for a graduate to reach a salary of £21k in comparison to those without university qualifications? The graph below shows all of the three variables, and probably needs a little bit of an explanation…

Source: Labour Force Survey, Office for National Statistics

So, in this graph the area furthest away from the viewer represents the older age groups and more highly qualified individuals. The higher the point in that area, the higher the average wages. I have also shaded in anything under the equivalent of a £21k wage (this had to be adjusted for inflation)**

This suggests that £21k could be expected by those who have not been to university, but also that those who have been to university can expect a higher wage earlier in their working life. So you can expect to start paying back loans as soon as you graduate. The flip side is that you will not start doing so until you are receiving a wage significantly higher than 50% of the rest of the country are earning, while probably receiving more than those who are less qualified. This points to the conclusion that, despite the higher costs of tertiary education, it may well still be worthwhile.

* £21,000/52.177457 = £402.47
**The last time they took this data set was in 2000, so it would have been inaccurate by about 20%. I calculated the difference by using this website (easier than doing it yourself), this made £402.47 in 2011 prices to be £312.50 in 2000 prices.

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