Financial gains from completing post-secondary education have diminished in recent years, according to RBC economists.
Last week, RBC economists Rachel Battaglia and Abbey Xu released a report on financial returns associated with post-secondary education. The report found that while university graduates are some of the highest income earners after finishing their education, returns have diminished in recent years.
“The income earned by graduates has lagged tuition growth, particularly in fields such as engineering, architecture, and related sciences,” the report said.
“Incomes are still positively correlated with attaining higher education as university degree holders earn the highest median income after graduation compared to certificate and diploma holders.”
In order to measure financial returns, the report compared income earned five years after graduation to tuition paid in the last year of study. The economists found that rising tuition costs outpaced median income growth for graduates five years after completing an undergraduate degree.
“After adjusting for inflation, tuition rose 12 per cent between 2012 and 2017 for all undergraduate studies, while the median income for graduates rose just four per cent from 2017 to 2022,” the report said.
However, the gap was found to be “more pronounced” for those who studied engineering, architecture or those in related science fields as final year tuition rose faster compared to other disciplines.
“Median incomes five years after graduation in 2022 were 8.6 times more than tuition costs in the final year of study for architecture and related sciences,” the report said.
“It’s a sizable decrease from five years earlier when the median wage five years after graduation (2017) was 10.6 times higher than students’ final year of tuition in 2012.”
While engineering undergraduates saw the second-largest drop in returns on tuition investment, the cohort still has among the highest median income levels for degree holders, according to the economists.
The report also highlighted that returns on post-secondary education are not negative and census data shows a “clear trend” where higher educational achievement corresponds to higher median incomes.
Going forward the economists said caps on domestic tuition hikes from certain provinces over the last five years may “boost the income multiple over tuitions in the future – but many other factors will be at play.”
