Is tertiary study still essential for career success? Experts weigh in

Many young Aussies believe post-school study is no longer essential for career and salary success. See what the data says about who earns more: uni, VET or high school grads.

A university degree is still the best way to achieve high lifetime earnings, experts say, contradicting popular belief among young Aussies that post-school study is no longer essential for career success.

Despite the eye-watering pay packets of tradies, they still finish second to uni graduates when it comes to earnings over an entire career, even when course fees are considered, says school leaver service Year 13.

And while entering the workforce straight from school might see young people start financially in front, their fortunes will likely diminish over time, says Year 13 general manager Hannah Curtis.

“Young people going directly into employment will be coming out financially ahead early on in their careers by having full-time earnings earlier and not having a university or VET course debt to repay. But, over time, this difference starts to be reduced,’’ Curtis says.

“When it comes to earnings, the data we are seeing is that choosing (a) VET or university (qualification) absolutely gives you a better chance of higher earnings over the longer term.”

Harry Edwards dropped out of school during Year 10 and now operates a video editing agency.

‘Zero issues’

Tertiary education is increasingly dismissed by young people, exclusive research from freelance marketplace Fiverr shows. Two-thirds of Generation Z now see a university qualification as “nice to have” rather than essential to pursuing their dream career.

Melbourne-based Harry Edwards is among those opting out of tertiary education – and experiencing surprising success.

Edwards dropped out of school during Year 10 to establish 16 e-commerce stores, which he sold once revenue had reached more than $200,000.

At 19, Edwards – who attributes his business prowess to watching educational videos on YouTube – now operates a video editing agency that has generated more than $1.25m in revenue and has about 16 full-time employees.

“There have been zero issues that I can think of related to me not getting my high school certificate,” Edwards says.

“While I may not have a strong formal education, I am intensely educated in matters related to my business and my interests.

“Education comes through practical, formal and informal means and my focus has been on practical and informal learning.”

Winners and losers

For most, however, a tertiary education is key to strong employment outcomes.

Curtis says university is still the only pathway into traditional careers such as law, engineering and medicine.

Many other careers, including those in the trades, have licensing or registration requirements that can only be satisfied by completing an apprenticeship or vocational qualification, she says.

Higher incomes over the longer term are also linked to post-school qualifications, whether from university or TAFE and other vocational training providers, she says.

“Young people going straight into the workforce will typically earn about $50,000 a year,” Curtis says.

“But Australian university students, after finishing their studies, will usually earn about $60,000 per year for their first job and VET graduates earn a little less than that.”

Over an entire career, university and VET graduates enjoy much stronger wage growth than those without tertiary qualifications, Curtis says.

She says university graduates remain the highest paid long term, due to more promotional opportunities available.

“University students might start a little bit behind, but they do have higher lifetime earnings because the professions (that require a uni qualification) usually have more room for career advancement, especially when it comes to managerial roles,” Curtis says.

Recruiter Andrew Sullivan, from Sullivan Consulting, says most employers still preference candidates with post-school qualifications and believes roles requiring formal skill sets are often more personally rewarding.

“I suppose you don’t have to have qualifications to do traffic control, where we’ve got people that can pick and choose their (work) hours and earn good money – but that’s not for everyone,” Sullivan says.

“Most employers will want to see evidence of skills and a qualification does that.”

On average, uni graduates earn the most over an entire career. Picture: iStock

No degree necessary

Workplace expert Damien Andreasen, vice president of HR tech company HiBob, disagrees and says more companies, particularly those in tech, are now willing to take on workers without formal qualifications.

“I don’t look for any kind of education levels in the juniors I’m hiring,” he says.

“We have never (listed qualification requirements) in any job ads and we’ve hired a lot of people with minimum experience and no qualification.”

Instead, Andreasen makes hiring decisions based on the soft skills a candidate has, their work ethic and whether they are “teachable”.

“There are lots of things that can show you the capability and drive (of a job candidate),” he says.

“I would much rather see someone come to me with three years of practical experience rather than some piece of paper from a flagship university.”

Fiverr chief marketing officer Matti Yahav says while “there’s undoubtedly value in further education”, young people are adopting a more “entrepreneurial spirit”.

He says freelancing provides valuable experience and skills that are increasingly recognised by employers.

“Amid a skills shortage in Australia, searches on Fiverr show that businesses are increasingly focusing on harnessing the power of skilled freelancers to drive their companies forward and fill in resourcing gaps, especially in the areas of AI, eCommerce and social media marketing,” Yahav says.

The pros and cons of tertiary education

– Starting salaries – university graduates: $60,000-$65,000; VET graduates: $50,000-$60,000; high school graduates: $40,000-$50,000.

– Mid-career salaries – university graduates: $80,000-$150,000; VET graduates: $60,000-$90,000; high school graduates: $50,000-$75,000.

– Salary growth rates – university graduates: high; VET graduates: moderate; high school graduates: low to moderate.

– Also consider: university and vocational training fees are typically $6000 to $10,000 per year, depending on the course studied. VET courses usually last one to two years; a university qualification can take between three to five years.

– Students forgo full-time earnings in these years but can earn about $20,000 working casually.

– Most uni and VET students finance their tuition through HECS-HELP, with repayments starting once their income reaches a certain threshold, which is $51,550 in 2023-24. Last month, the federal government announced changes to the way HECS debts are indexed, which will see an average HECS debt of $26,000 drop by about $1200.

– Young people going directly into employment come out ahead financially early on, through having full-time earnings earlier on and no course fees to repay, but uni and VET graduates will be financially better off over the course of their career.

Source: Hannah Curtis, Year 13

Originally published as Is tertiary study still essential for career success? Experts weigh in