Explore how ITO completers are $165,000 better off than university graduates at age 28
Many secondary school leavers look to university as a requirement to start a successful career. This often means apprenticeships and direct transition into the workforce with Industry Training Organisation (ITO) training is overlooked.
In this analysis we track a cohort school leavers turning 19 in 2003 until 2016 allowing us to see their incomes until the age of 32. We find that school leavers who transition into ITO training have higher incomes than university graduates as they head into their late twenties. From the five ITO's we study, we distinguish male trainees as earning $135,000 more than male university degree graduates at age 28. University graduates succeed as the highest earners going into their thirties, however carry a extra burden of student loans, which on average are $30,000. 'Fees-free first year' was introduced in 2018 which lowers the cost of studying at university, however this also covers ITO training fees in most cases for the first two years.
We track raw average income through IRD tax records of our cohort each year after turning 19, allowing us to see their income until they turn 32 in 2016.
The five ITO's we distinguish are BCITO, Competenz, Connexis, Skills Org and MITO. Trainees from these five ITO's have the highest average income each year until after the age of 28 for males, and 25 for females, whereupon the average university graduates succeed as the highest earners.
In terms of cumulative income, the average 28 year old trainee from the five ITO's we distinguish has earned $135,000 more than the average university graduate by age 28. This gap in income closes going into their thirties, however by age 32 trainees are still $100,000 ahead of university graduates.
The cost of tertiary study
Over the course of their study, the average university student accumulates an average of $30,000. When adjusting for the cost price index in 2018, that would be approximately $38,000. In 2018 the 'fees free first year' was introduced, which would lower this cost by approximately $9,000. However, it would also be applicable to covering ITO course fees which are often in the range of $2000 - $4000.
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Entering directly into a profession from secondary school through ITO training has its benefits of earning while you learn, and avoiding accumulating a large student loan. At the age of 28, males would be $165,000 ahead of their average university counterparts when considering the extra income they are earning and the absence of large student loans.
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