The Graduate Premium - the area Y less the area X - is the gross excess that a graduate earns over a lifetime. At Net Present Value, it's estimated at somewhere between £400k and £1m. And this is the reason why successive governments all want to make students pay more for their qualifications. They reckon that £40k of debt is a cheap price to pay for £400k of benefits. Prospective students, of course, will not see it that way.
My question is why the greater supply of graduates in the economy hasn't apparently competed away the scale of the Premium by anything significant - as a recent government survey suggests;
There is, however, evidence that the graduate premium may now be starting to decline. According to the Department for Education and Skills, in 2005 and in England alone, the difference in earnings between graduates and those educated to A-level or equivalent remained high at 45%, but was slightly lower than the position in 2001 when the margin was 51%. The above finding has to be interpreted in a wider context, however. First of all, graduates are continuing to earn substantially more than non-degree holders and they are also less likely to be unemployed. Moreover, research from the Organisation for Economic Co-operation and Development (OECD) has shown that the graduate earnings premium in the UK is high by international standards, and is lower than those in only five other countries: the Czech Republic, Hungary, Poland, Switzerland and the US.So equitable recovery of tax costs or grossly unfair imposition? You decide.