Background. Mental disorders often begin during the formative years of education. They may disrupt education and lead to social underachievement.

Methods. We examined the impact of mental disorders treated in hospital (ages 16–29) on educational attainment up to 31 years in the Northern Finland 1966 Birth Cohort (N = 10581). People discharged due to mental illness were grouped by DSM-III-R diagnoses (of schizophrenia, other psychoses and non-psychotic disorders) and were compared with those having no such hospital treatment. Associations between diagnoses and educational outcome (completion of basic level, upper secondary or tertiary education) were analysed stratified by age at onset (early onset < 22 years v. later), and adjusted for confounding by perinatal risk, early motor development, maternal education, family structure, parental social class, and school achievement using prospective data from earlier assessments and logistic regression analysis.

Results. Twelve per cent of the comparison group completed basic level education, 62% upper secondary, and 26% tertiary education. People with early onset disorder tended to stagnate in the basic level. Early onset schizophrenia and all non-psychotic cases had 3- to 6-fold adjusted odds for this outcome. Many with early onset schizophrenia completed secondary education, but none completed the tertiary level. Hospitalization for non-psychotic disorder increased the risk of underachievement in tertiary education for those with early onset.

Conclusions. Mental disorder treated in hospital truncates education. Failure to complete higher education may contribute to the ‘social exclusion’ of the mentally ill through reduced opportunities in later occupational life and failure to accumulate social capital.