For years, the promise to Britain’s brightest was straightforward: work hard, earn a university degree, and enjoy higher pay.

That promise is fading. A Bloomberg analysis reveals that the graduate pay premium over minimum-wage salaries in England has halved since 2007.

After adjusting for higher living costs, pay for a typical single working-age graduate is now 30% — or £8,000 ($10,500) — lower than it was then.

As the Labour government steps back from encouraging higher education, other policy decisions, including a rise in the National Living Wage introduced by Chancellor of the Exchequer Rachel Reeves, have contributed to narrowing the gap — and upcoming measures could shrink it further.

“I do regret going to university,” said Hayley Knight, still burdened with around £18,000 of student debt 15 years after graduating. The 37-year-old, who works in public relations in London, studied creative writing and English literature during former Prime Minister Tony Blair’s push to get 50% of young people into higher education.

In 2007, graduates aged between 21 and 30 in England earned twice as much as minimum-wage workers on a 40-hour week. Today, despite the UK’s prestigious universities and global research breakthroughs from Covid vaccines to flat-screen televisions, that salary edge has thinned. In 2024, young graduates earned £1.43 for every pound earned by a minimum-wage employee working a 40-hour week.

The gap is even narrower when considering post-tax earnings and student loan repayments. Under those terms, graduates earn just 32p extra compared to minimum-wage employees. Similar patterns are seen across all working-age graduates and those with postgraduate degrees.

Despite UK undergraduate fees being capped at £9,535, among Europe’s highest, the financial returns are among the lowest in the developed world. OECD data shows that only Turkey ranks below the UK in net financial returns for women, while for men, the UK sits in 25th place among 32 countries when accounting for long-term pay gains against university costs.

Research from King’s College London and Ipsos shows growing disillusionment, especially among young men: around 40% of men aged 16 to 29 expect their generation to have a worse life than their fathers, while only 20% expect improvement. Most young women, however, expect better outcomes than their mothers.

There is some comfort in government data showing employment rates for working-age graduates are almost 20 percentage points higher than for non-graduates. Yet an Institute for Fiscal Studies analysis shows pay outcomes depend significantly on course and institution. With Chancellor Reeves considering tax increases on workers ahead of the Nov. 26 budget, these figures are a major concern for current students.

Souhridyo Bose, a management undergraduate at University College London originally from India, said UK starting salaries are “adequate enough to just live.” Graduate pay has fallen behind rising living costs, with rent more than doubling since 2008, according to Loughborough University. Food, clothing and water bills have also soared. The squeeze on graduates reflects aggressive minimum wage hikes, increased university attendance, and broader wage stagnation. The minimum wage has surged 82% in cash terms since 2015, pushing the UK up to seventh in OECD rankings for minimum wage relative to average earnings. Since 2007, the annual salary of a minimum-wage worker on a 40-hour week has risen 107% in cash terms, compared with less than 50% for graduates aged 21 to 30. Using the Minimum Income Standard, graduate earnings have fallen by almost a third.

An oversupply of degree holders may also be pushing salaries down. McKinsey & Company advisor Tera Allas found that 40% of university leavers are in roles that don’t typically require degrees. Stephen Evans, chief executive of the Learning & Work Institute, said qualifications were “a more powerful signal to employers when only 30% of the population had one.”

Degree type and university prestige now carry greater weight.

Bose said finding a job in the UK is much harder than in India. There, students undergo tough entrance exams but can rely on academic results and university job boards for placement.

“In India, jobs are a tiny thing, especially if you’re from a top uni,” he said. “Over here, job application at times feels like it’s a separate degree.”