A university degree still delivers a substantial financial advantage over a working life, but new analysis suggests the payoff can take decades to emerge and, for some graduates, may struggle to match the earnings of skilled tradespeople.
The finding adds another dimension to questions over Australia’s education system after research published this week found the country has its most highly qualified generation on record while employers continue to report shortages concentrated in trades and other vocational occupations.
As reported by The Indian Sun earlier, 47 per cent of Australians aged 25 to 34 now hold university degrees, yet 29 per cent of assessed occupations remain in shortage. More than four in ten recently employed graduates also say they are overqualified for the jobs they hold.
The same research, contained in The Balance Sheet: The Education Economy, asks a more personal question for students and parents deciding what happens after Year 12: does the degree still pay?
Its answer is yes, but not necessarily as quickly or as evenly as Australians have traditionally assumed.
The report cites previous Grattan Institute estimates putting the lifetime earnings advantage of a bachelor’s degree over completing Year 12 at roughly $800,000 for men and $600,000 for women. But those estimates are substantially below earlier figures of about $1.4 million for men and $1 million for women based on 2011 data.
It also points to census research showing the earnings premium associated with postgraduate qualifications declining from 93 per cent to 72 per cent, while the bachelor’s degree premium fell from 57 per cent to 53 per cent in the decade to 2021.
The comparison becomes more complicated when the cost of studying is measured not simply by university fees, but by what a student could have earned during those years.
Under Commonwealth-supported fee settings for 2026, law, accounting, economics, commerce, communications and society and culture subjects can attract student contributions of up to $17,399 for a full-time year. Engineering and science are capped at $9,537, while education, mathematics and nursing are among fields capped at $4,738.
The report argues that three or four years outside full-time work can represent another $170,000 to $250,000 in foregone earnings. On that calculation, it estimates the economic cost of becoming qualified can reach $200,000 to $300,000 for some students before the graduate earnings advantage begins to recover the difference.
That is where the comparison with trades becomes particularly interesting.
A person beginning an electrical apprenticeship at 17 starts earning while training, rather than accumulating several years of university costs and deferred earnings. The report says trade apprentice completers record an employment rate of 94.8 per cent and estimates qualified electricians typically earn about $95,000 to $115,000, with earnings potentially reaching $120,000 to $145,000 with overtime. Nearly half of technician and trade occupations are in shortage.
Starting an electrical apprenticeship at 17 means earning while learning, with trade completers recording a 94.8 per cent employment rate. Qualified electricians can earn $95,000 to $115,000, rising to $120,000 to $145,000 with overtime. Nearly half of technician and trade occupations are already in shortage
An indicative earnings model in the report compares that pathway with a median university graduate and a creative arts graduate.
Its modelling suggests the median graduate’s annual salary catches the electrician at about age 33. But salary parity is not the same as financial parity: by then the tradesperson has accumulated years of earnings while the graduate spent several years studying.
On the report’s assumptions, the university graduate does not recover that cumulative earnings gap until their 50s.
The calculation is not a forecast of what will happen to an individual student. The report explicitly labels the chart an estimate constructed from award wages, salary data, graduate starting salaries and assumed real earnings growth. Careers, overtime, promotions, unemployment, business ownership, postgraduate study and individual ability can radically change the outcome.
It nevertheless challenges the conventional assumption that university automatically represents the financially superior path.
Field of study makes an enormous difference.
The report says medicine, engineering and law can overtake the trade pathway much earlier, while creative arts graduates face a very different calculation. It puts full-time employment for creative arts graduates at 53 per cent and starting earnings at $63,200, arguing that some may never recover the cumulative earnings advantage of a tradesperson earning substantial overtime.
Nor do graduate outcomes stop improving a few months after university. The 2025 Graduate Outcomes Survey Longitudinal found full-time employment among domestic undergraduates who completed their courses in 2022 rose from 79.5 per cent shortly after graduation to 91.7 per cent three years later.
That matters because a university degree remains an investment extending across an entire career, rather than a judgement that can be made from a graduate’s first salary.
But the evidence also raises questions about the way Australian families have traditionally ranked university and vocational education.
Vocational education had 5.1 million students in 2024, making it the country’s largest education sector by enrolment, according to the report. Yet the apprenticeship pipeline has weakened, with apprentices in training down 24 per cent from their 2023 peak and trade commencements falling 15.3 per cent in the year to June 2025. Only about 55 per cent of apprentices ultimately complete their training.
Those numbers sit awkwardly beside Australia’s skills shortages.
The report finds 41.4 per cent of employed recent graduates consider themselves overqualified for their jobs, while graduate underemployment has risen to 19.4 per cent. At the same time, nearly half of technician and trades occupations are in shortage.
The question, therefore, is no longer simply whether Australians should go to university.
It is whether students are being encouraged to choose qualifications on the basis of where they lead, what they cost and how long the financial return may take, rather than treating a bachelor’s degree as the default destination for a successful school leaver.
The degree still pays on average. The more difficult finding is that the size and timing of that payoff increasingly depend on what a student studies, while some Australians who bypass university can spend much of their working lives financially ahead.
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