The financial benefit of a degree has halved in 20 years as critics blame 'Mickey Mouse' courses for 'devaluing' university.
Graduates born in 1990 earned 11 per cent more than non-graduates at age 26, while for those born in 1970 it was 19 per cent, a study shows.
This suggests the 'graduate premium' – or the financial return of a degree – fell by eight percentage points, indicating that educated millennials in their late 20s are not enjoying the same advantage as previous generations.
The report, by the Higher Education Statistics Agency (HESA) and the Department of Economics at Warwick University, comes following a huge expansion of students attending university.
Last year the proportion of youngsters set to obtain a degree increased to more than half for the first time, but universities have repeatedly been accused of recruiting 'bums on seats' for new low-quality courses which are not valued by employers.
Many graduates have complained that they are having to settle for non-graduate jobs in cafes and supermarkets. It suggests that going to university no longer guarantees a professional middle-class lifestyle.
Yesterday Chris McGovern, of the Campaign for Real Education (CRE), said: 'Degrees are becoming the new A-levels. In some cases, they are more a 'disqualification' than a 'qualification' for employment.
'It is a scandal that so many school-leavers are being seduced on to useless Mickey Mouse courses by unscrupulous and money-grabbing universities. The university degree currency has been seriously devalued. In some cases they are little more than educational confetti.'
Mr McGovern said it means those who are truly bright now require a masters or doctorate degree to stand out. And he accused universities of recruiting too many students to make more money, as each now pays £9,250 per year.
'This is great news for self-seeking, 'rip-off' universities but a betrayal of too many under-employed young people whose graduation often leads to a life of debt, disappointment and despair.'
A total of 50.2 per cent of 17-30 year-olds in England participated in higher education in 2017-18. This fulfils a target set by former prime minister Tony Blair in 1999, when only 39 per cent attended.
Over 30 years, many universities have been created from former polytechnics, and the Government has removed the student numbers cap.
This has led to accusations of 'dumbing down' with critics questioning the usefulness of subjects such as 'football studies' and 'golf management'. The HESA study says its findings are tentative, with further research required to see if this is a short-term dip or longer decline.
Tej Nathwani of the HESA said: 'While the benefits of a degree are not solely financial, higher education remains a significant investment decision.'
Dr Greg Walker, chief executive of universities' group MillionPlus, said: 'That there has been a dip in returns for the generation in the aftermath of the Great Recession in 2008-09 is not surprising.
'A strengthening economy should mean a further upswing in the number of graduate-level roles.'