Report looks at how much it pays to get top university grades

·3-min read

Graduates with top university grades tend to earn substantially more money – but the size of the “payoff” may also hinge on where and what you study, according to a report.

Women with first-class degrees were earning around £2,200 more than females with upper second-class degrees on average five years after graduating, while men in the same situation earned around £4,100 more, the Institute for Fiscal Studies (IFS) said.

The research, commissioned by the Department for Education, examined the financial benefit associated with different degree classifications.

It found there has been a long-term trend towards higher degree classes awarded in all subjects and at all levels of university selectivity.

The report said: “Earnings differences between those graduating with different degree classes are large.”

It said five years after graduation, median average annual pre-tax earnings for both women and men who obtained a lower second-class degree in 2013 were around £3,800 lower than for those who had received an upper second-class degree.

Women with first-class degrees earned around £2,200 (8%) more than women with upper second-class degrees, and men with first-class degrees typically earned £4,100 (14%) more than men with upper second-class degrees.

Payoffs for a higher degree class varied hugely by subject, researchers found.

For men and women studying law or economics, getting a lower second-class degree rather than an upper second is associated with more than 15% lower earnings, whereas there is no significant difference for those studying education or English, according to the report.

Jack Britton, associate director at IFS, reader at the University of York and a co-author of the report, said: “For many subjects, the difference between a first and a 2.1 is inconsequential for earnings.

“However, for others, such as economics, law, business, computing and pharmacology, it is substantial.”

Degree class also seems to particularly matter for those attending the most selective universities and studying subjects where future earnings are highest, the report suggested.

This suggests that access to “elite jobs” is governed by what you study and where you study as well as how well you do at university, the IFS said.

Its research also indicated stark gender differences in the payoff to achieving a first-class degree at a very selective university.

At very selective universities, the average payoff to a first-class degree versus a 2.1 is near zero for women, but very large at around 14% for men, the report found.

This suggests that fewer high-achieving women go on to high-earning careers.

Ben Waltmann, senior research economist at IFS and a co-author of the report, said: “Other things equal, going to a more selective university is good for future earnings, and the fact that few students from disadvantaged backgrounds attend the most selective universities is a barrier to social mobility.

“But that being said, many graduates who get a 2.2 from a highly selective university might have got a higher-paying job had they attended a slightly less selective university and got a 2.1. Prospective students, parents and policymakers should take note.”

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