If you find yourself wasting valuable time queuing in a scrum with a thousand other consumers trying to get the newest smart phone or holiday toy, when you can be writing an essay or selling doughnuts in a local shop, you are a living example of the economic principle of opportunity cost.

In fact, so are you when you decide (or not decide) to go to university. You are giving up on three of the most productive years of your life to study, when you can spend them working, not accumulating debt and gaining valuable “real-world” experience. And yet, most people would say university is the best investment you can make, and that it will more than pay off in your lifetime. The correct answer here is that university is indeed the best investment you can make, except for when it is not.

If you go straight into the job market after graduation from high school, we assume you will work full time from age 18 until you retire at 70 (or older, depending on whether Silicon Valley people invent immortality). If you decide to go to uni, you pass up on three years of work and spend about £16,000 on tuition, food and clubs each year. On the other hand, the average income you can expect to earn with your A-levels at age 18-21 is about £17,000, and then about £23,000 for the rest of your career.

As a university graduate, you will earn about £21,000 when you start work at 21, and your salary will peak at about £36,000 when you are 50. At first sight, it seems easy enough to say that university pays off better, but you have to remember money today is generally worth more than money in the future. This is due to interest rates you will earn if you put your money in a bank or invest it in (low-risk) businesses right now.

Thus, university will only pay off if the real interest rate of your loan is less than the interest rate of your uni experience. This is how much more than your loan and living expenses you will earn as a uni graduate. We don’t take inflation into account because we expect salaries to increase at the same rate as inflation, so real wages are constant. The question here is, what is the highest interest rate on your loan that makes uni worth it?

It turns out that this rate should be about 10 per cent for the average uni and about 13 per cent for Oxbridge, because this is your average lifetime return on investing in uni education. Right now, the real student loan interest rate in the UK for people who started their courses from 2012 ranges from 0 per cent (you are only paying the inflation rate if your earn less than £21K) to 3 per cent (if you earn more than £41,000). As the average graduate will never reach £41,000 of annual earnings, the average interest rate paid year on year will be about 2.5 per cent. This is far less than the stipulated 13 per cent for Oxbridge and 10 per cent for other universities, so if you want to maximize your lifetime earnings, uni is the way to go. As money (even for economists) is not everything, the uni experience will hopefully make it an even more worthwhile investment.