Getting a bad grade at a UK university could cost you

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IFS research found that both men and women who graduated from a UK university with a lower second-class degree in 2013 were earning on average £3,800 less a year before tax five years later.

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According to a new study from the UK’s leading independent research institute, failing to get a top grade in college could mean earning around £3,800 ($4,946) less a year.

The study, published on Wednesday, found that both men and women who graduated from university in the UK with a lower second-class degree (known in the UK as 2:2) in 2013 earned an average of £3,800 less a year (before tax) five years later.

This was in comparison to students who had an upper class second degree (known as 2:1), which is considered to be the average grade many British students receive.

In the UK, a first class degree with honors or 1:1 is the highest rating that can be awarded to a student for their degree. This is followed by a 2:1, a 2:2 and a 3rd class honors degree.

The study was produced by the UK’s Institute for Fiscal Studies and commissioned by the Government’s Department of Education. The principal earnings estimates were based on a sample of approximately 470,000 graduates who were born between the school years 1985/86 and 1987/88 and who had entered undergraduate or postgraduate studies by the age of 21 (between 2007 and 2009) and graduated by the age of 21 to the age of 27 (between 2013 and 2015).

The IFS found that five years later, women who graduated 1:1 from a UK college were on average earning £2,200 more than women who graduated 2:1.

And this income gap was even larger for men who graduated with the highest grades. Men who graduated with honors in the UK with a first-class degree typically earned £4,100 more than those who received a 2:1 degree.

In addition, the IFS found that getting at least a 2-1 score at some of the UK’s top colleges pays far more. Students who graduated 2:2 from the most “selective” UK universities earned, on average, 20% less than those with a 2:1 degree by age 30, according to the study.

The IFS named the four most selective universities as Oxford, Cambridge, Imperial College London and the London School of Economics. These universities belong to a group of 24 of the UK’s leading colleges known as the ‘Russell Group’, similar to the ‘Ivy League’ in the US

Gender pay gap

The study highlighted that there was a big difference in payout for men and women after achieving a first-class degree from one of the UK’s most selective universities. The IFS report says there was “almost zero” payout for women for scoring 1-1 versus 2-1 at one of these colleges, while men typically earn 14% more per year for graduating with the college deserve the highest rating.

Grades also played a role, depending on what subject the graduates had studied. For example, men and women who got a 2:2 degree in law or economics tended to earn 15% less than if they had gotten a 2:1 in either of those subjects.

The IFS pointed out that overall there is a long-term trend towards higher degrees in all subjects and at all levels of higher education selectivity.

Ben Waltmann, senior research economist at IFS and co-author of the report, said the findings imply that “degree ranking can be as important for income later in life as the university one attends”.

“All other things being equal, attending a more selective university is good for future income, and the fact that few students from disadvantaged backgrounds attend the most selective universities is a barrier to social mobility,” he said.

The cost of a degree continues to rise for UK students. Under government plans announced in February, students starting college in the UK next year could still pay off student loans into their 60s. In the UK, the state usually pays tuition fees and part of the cost of living, which graduates then pay back from their monthly paycheck once they earn a certain amount, such as a tax.

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