New Research Shows It Pays To Study Hard In College

A good degree can make a big difference to graduate earnings (Photo by Colin McPherson/Corbis via … [+] Getty Images)

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Getting a good degree pays off in the shape of higher earnings after graudation, according to a U.K. study.

Students who get a top degree are earning more five years after leaving university than those who are less academically successful.

The link with the standard of degree may even trump the effect of going to a more selective university: students with a good degree from a less selective college earn more than those with a lower-class degree from a more selective institution.

But the payoffs vary widely between subjects. Law and economics graduates can expect a significant premium if they get a good degree, while there is no significant difference for graduates in English and education, according to analysis by the Institute of Fiscal Studies (IFS) for the Department for Education.

The study was carried out on graduates from universities in England, where degrees are divided into first class, upper second, lower second and third.

The proportion of students getting first class degrees has more than trebled in the last 20 years, with around one in five students now getting the top classification. Half of students get an upper second class degree, and another fifth get a lower second.

The IFS found that there were “substantial” earnings differences between degree classes for both men and women. Women with a first class degree earned an additional 8% over those with an upper second, while for men the premium was 14%.

Women with a lower second class degree earned 15% less than women with an upper second, while men faced a 13% penalty.

The payoff was larger at more selective universities, with a 20% difference between an upper and lower second, compared with around 6% for women and 8% for men at the least selective colleges.

It may be that students earning a first or upper second class degree are more motivated to succeed, a characteristic that they then transfer to their careers, but it the analysis suggests that access to the highest paid jobs is governed by what you study, where you study and how well you do at university, the IFS said.

But there were big differences in the payoff by gender at the most selective universities – Oxford and Cambridge universities, Imperial College London and the London School of Economics.

While a first class degree at these institutions carried virtually no premium over an upper second for women, for men the premium was very substantial, at 14%.

This suggests that fewer high-achieving women go on to high-earning careers, the IFS said.

“The findings imply that degree classification may matter as much as university attended for later life earnings,” said Ben Waltmann, senior research economist at the IFS and co-author of the report.

While attending a more selective university is good for future earnings, graduates with a lower second class degree from a more selective university may have got a higher paying job if they had got an upper second class degree from a less selective institutions instead, he added.

The premium also varied substantially by subject. Law and economics graduates with a lower second earned 15% less than their classmates who got an upper second, while in English and education there was no significant difference.

But across all degrees, the gap in earnings between getting an upper second and a lower second is more important than the gap between getting a first and an upper second, said Jack Britton, IFS associate director and co-author of the report.

And while for some subjects, such as economics, law, business, computing and pharmacology, the gap in earnings between a first and an upper second is significant, for many subjects it is inconsequential, he added.