Pursuing a university degree remains a pathway to higher earnings, but recent analysis from the Royal Bank of Canada (RBC) suggests that the financial returns on such an investment have declined compared to previous years.  

A report by RBC economists Rachel Battaglia and Abbey Xu, released on Monday, compares the average median income of 2017 graduates with their final year tuition costs. Adjusted for inflation, undergraduate tuition fees increased by 12% between 2012 and 2017, while median incomes for graduates from 2017 to 2022 rose by only 4%. This disparity is particularly pronounced in fields such as architecture and engineering, with the gap widening by more than 8%. 

For example, engineering graduates from 2012 earned a median income 12.3 times their final year tuition five years later. In contrast, graduates from 2017 earned about 10 times the annual tuition costs. Despite these relative declines, university degree holders still earn more compared to those with lower educational attainment. 

The report highlights that median incomes for engineering graduates remain among the highest for undergraduate degree holders, offering a more favorable return on tuition investment compared to many other programs. In 2021, individuals with a bachelor’s degree or higher had a median income of $61,600, representing a 44% increase over the overall median income in the sample analyzed by RBC. This figure is more than double the earnings of those with only a high school diploma. 

However, the earnings gap between university degrees and other forms of post-secondary education is narrowing. Those holding a university certificate or diploma—less advanced than a bachelor’s degree—earned a median of $45,600 in 2021. This is slightly higher than the median incomes of $45,200 for individuals with apprenticeships or trades certificates, and $44,800 for those with college or CEGEP degrees. 

In summary, while a university degree continues to offer a financial advantage over lower educational attainment, the incremental returns have diminished, prompting a reconsideration of the cost versus benefit of higher education in today’s economic landscape. 

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