Two studies have highlighted the benefits apparently accrued by people with degrees as opposed to those without them. One study was commissioned by the Department for Education and Skills, and the other done by the Institute of Education and commissioned by the Higher Education Funding Council.

Lifelong Learning and Higher Education Minister Margaret Hodge said: "We already know that having a degree means on average you earn £400,000 over a lifetime more than non-graduates. Now this research confirms that those who aim higher and get a degree enjoy a better lifestyle and standards of living."

DfES Findings
- the average value of homes owned by graduates are £153,000 compared to £101,000 for non-graduates. Average rents paid are £423 a month compared to £256.

- graduates are twice as likely to go on holiday abroad. Almost half of non-graduates did not take holidays abroad compared to just one-fifth of graduates.

- Graduates had double the average number of promotions at work than non-graduates over the last five years. And only 36 per cent of graduates had not been promoted at all, compared to 57 per cent of non-graduates.

Institute of Education findings
- graduates were 16 per cent less likely to smoke

- graduates were more likely to have voted in the last election

- graduates were more likely to be involved with their local communities and members of local community and voluntary groups, including parent teacher associations

- higher education enhances labour market prospects, not only through earnings, but "guaranteed access to the best jobs"

Mrs Hodge added: "We will have failed if we hit our target of 50 per cent participation in higher education among 18 -30 year olds by 2010 without recruiting from those groups who have historically missed out on higher education. The benefits to the individual from gaining a degree are immense. But aside from that, more graduates will strengthen our economy. Our labour market forecasts show that eight out of 10 of the new jobs created over this decade will require the sorts of skills that can be acquired through higher education.

"I think people forget that we only want half of our young people in higher education, and that some of those will be doing high level vocational courses that will meet employers’ needs. That still leaves another 50 per cent to pursue valuable careers that will fill skills shortages in plumbing, construction and other trades."

The Institute of Directors recently published a report calling for more vocational training and fewer non-vocational degrees.