Impact of degree classification on early career outcomes

What can Graduate Outcomes data tell us about whether a student leaving university with a First Class degree has any advantage over their peers?

The proportion of students graduating from English universities with First Class Honours has more than doubled over the last decade. This has led many to question the validity of these grades, with some suggesting that this threatens to undermine the value of UK degrees.1

Moreover, many have made claims that employers no longer value a First Class degree as they once did, asserting that employers are becoming reluctant to appoint graduates on this basis.2 However, the available data illustrates a different picture. Research has repeatedly shown that graduates who leave university with higher degree classifications have better employment opportunities and a higher likelihood of continuing education than those who leave with lower degree classifications.3

Using Graduate Outcomes data, this article will evaluate the outcomes of UK-domiciled, first-degree graduates who achieved First Class Honours 15 months after graduation and compare them with the outcomes of their peers.

Positive correlation between degree classification and employment rates

Degree classification,Rate of full-time employment,Rate of part-time employment,Rate of unemployment
First class honours ,76,9,0.1
Upper second class honours ,73,11,0.2
Lower second class honours ,72,14,0.3
Third class honours/Pass ,72,16,0.4

First-degree graduates who achieved First Class Honours were more likely than others to be in full-time UK employment 15 months after graduation. In fact, they have better outcomes across the board.

Not only were they less likely to be unemployed, but they were also more likely to be in further study, with 13% saying that they were studying full time (0.3%) or combining work and study (13%), compared to 12% of those with a 2:1, 11% of those with a 2:2 and 11% with a Third.

In addition to this, they were significantly more likely to be working in professional-level employment than others, 77% of those with a First Class degree said this compared to 68% of those with a 2:1 and 59% of those with a 2:2.

This pattern is true for all groups. For instance, disabled graduates (73%) who achieved First Class Honours were more likely to find professional-level employment than those with a 2:1 (64%) or 2:2 (57%). The same is true for graduates from an ethnic minority background: 75% of those with a First Class degree were in professional-level employment 15 months after graduation, compared to 66% of those with a 2:1 and 57% of those with a 2:2.

Degree classification and earnings

Recent research from the Institute of Fiscal Studies (IFS) explores the earnings differences between graduates who left university with different degree classifications five years after graduating.4

Unsurprisingly, they found that the earnings differences between those graduating with different degrees are large. Five years after graduation, median 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 received an upper Second Class degree.

Furthermore, women who obtained First Class degrees earned around £2,200 (8%) more than women with upper Second Class degrees, while men with First Class degrees earned £4,100 (14%) more than men who obtained upper Second Class degrees.

They also discovered that a lower Second Class degree is associated with 6.9% lower earnings compared with an upper Second for women and 10.9% lower earnings for men. Similarly, obtaining a Third Class degree was associated with 14.7% lower earnings for women and 18.3% lower earnings for men when compared with an upper Second.

Even after controlling for background characteristics (e.g. prior school attainment, ethnicity, school type etc.), earnings differences between degree classes are substantial for both women and men. Conditional on observable characteristics, the premium of gaining a First Class degree over an upper second is 3.5% for women and 7.0% for men.

Degree class matters

Quantifying these variations in outcomes by degree classification helps shed light on the question of whether universities are teaching their students skills that are useful in the labour market. If the skills that students learn at university and those required in the labour market are aligned then we would expect to see better outcomes for graduates leaving university with higher class degrees.5

Interestingly, using Graduate Outcomes data we find that graduates who achieved First Class Honours (60%) were more likely than others to say that they were utilising the skills that they obtained on their course at work. This compared to 52% of those with a 2:1 and 49% of those with a 2:2.

Contrary to the claims that employers no longer value a First Class degree because of their proliferation, the findings in this article suggest that achieving top grades can have a significant impact on the early career outcomes of first-degree graduates.

Notes:

1. First-class degrees more than double in a decade, BBC, 2022.
2. Five key takeaways from Graduate Outcomes 2019/20, Luminate, 2022.
3. Degree classification and recent graduates’ ability: Is there any signalling effect?, Di Pietro, 2016.
4. How much does it pay to get good grades at university?, Institute of Fiscal Studies, 2022.
5. Ibid.

Written by

Micha-Shannon Smith

Assistant information analyst

Prospects