One in five people would have been better off financially had they not attended university, research has revealed.
Male graduates enjoy an earnings boost of around £130,000 over the course of their working lives compared to what they would have earnt if they did not go to university, while women take home about £100,000 more, the report shows.
But the research estimates that one in five people with a university education, around 70,000 for each academic year, are left worse off financially than than their peers who avoided higher education.
Around 15 per cent of women and around a quarter of men have negative lifetime financial returns to undergraduate degrees, according to the analysis commissioned by the Department for Education.
The report also found a stark gender gap in earnings for employees aged between 30 and 40. Median earnings of men who studied degrees grow by £15,000 in their 30s, compared to just £5,000 for women.
This could be due to women taking time out to start a family, authors of the report suggested.
The findings also show there is no clear financial benefit for women in attending a prestigious Russell Group university, compared to one with lower entrance requirements.
And yet men who earn a place at a selective university can expect much higher returns than those who attend a less-selective institution.
Subject choice also has a significant impact on earnings. Women studying creative arts and languages see hardly any boost, but those who study law, economics or medicine gain around £250,000 on average.
Meanwhile, men studying medicine or economics have average returns of more than half a million pounds — but male creative arts students have negative financial returns, the data shows.
Jack Britton, co-author of the report and an associate director at IFS, said: “About one in five have negative private returns. They lose out from going to university. In most cases that is because they earn less than they would have done had they not gone.”
Almost no men with creative arts degrees will see an earnings boost from going to university, he added.
The research was based on the Longitudinal Educational Outcomes (LEO) data set produced by the Office for Students (OfS), the higher education regulator, comparing education records to tax and benefits data.
It counts all those who started a degree rather than everyone who graduated.
The research found economics and medicine represented the best returns for the treasury.
Women who studied these subjects earned the government an extra £200,000 and men an extra £500,000 before retirement.
But almost all creative arts students regardless of gender represented a net cost to the exchequer.
Ben Waltmann, co-author of the report and a research economist at IFS, said: “The government makes an overall loss on financing the degrees of nearly half of all graduates. These losses are concentrated among those studying certain subjects.
“For creative arts, for example, the losses are substantial. This need not mean that the government is misallocating funds, but it is important to be aware of the costs involved.”
Universities minister Michelle Donelan said: “This research underlines that our university sector is world-leading by setting out the impact higher education can have on someone’s life.
“When you add the unquantifiable experiences and friendships that come with that, it is no surprise our universities attract students from all over the world.
“However, that prestige is built on quality and my role is to work with the regulator to safeguard that, while ensuring students and the taxpayer are getting the value they would expect for their investment.“
Nicola Dandridge, chief executive of the OfS, said: “As this research demonstrates, higher education can have clear financial benefits for graduates.
“It is crucial that prospective students have access to clear and factual information about what and where they might study, and data on earnings potential is an important part of that picture.”
Jo Grady, general secretary of University and College Union, said: “A university education offers a clear earnings boost for graduates, but it is vital to recognise that education is about much more than just financial benefit.
“Focusing on future income following university ignores the wider benefits that education brings to individuals and to society.”
Alistair Jarvis, chief executive of Universities UK, said: “The evidence is clear that a degree from the UK’s world-leading university sector continues to give a significant boost to a graduate’s salary and career prospects.
“These graduates, including those who go on to work in sectors where salaries are relatively low, make vital contributions to the wider economy and to society.”