Graduating from Elite colleges greatly impacts your salary

A new salary has revealed that no matter where you earn your graduate degree, the prestige of your undergraduate institution continues to affect earnings.

The researchers said that college graduates who earn their undergraduate degree from a less prestigious university and a graduate degree from an elite university earn much less than those who attend both an elite undergraduate and graduate school. And it is unlikely their salary will ever catch up.

Joni Hersch, professor of law and economics at Vanderbilt Law School, said that status of the graduate degree-granting institution should have a more important relation to earnings than status of the undergraduate institution.

Hersch said that even high ability students who attend nonselective institutions for their bachelor's degrees are, on average, unable to overcome their initial placement by moving up to an elite graduate or professional school for an advanced degree.

The researchers divided the colleges into three categories, Tier 1 schools are top private research institutions. Tier 2 schools are selective private liberal arts colleges. Tier 3 are top public research universities and Tier 4 are remaining four-year universities and colleges. Because ability influences whether a student is accepted to a selective institution, Hersch accounted for ability in her study by examining graduates of similarly selective graduate programs.

It was found that graduates of Tier 1 schools earn a lot more than everyone else, but even when looking at those with graduate degrees from elite schools, the students who went to a lower tier undergraduate school earn considerably less.

Among those who earned a graduate degree from Tier 1 - 3 institutions, men from Tier 1 undergraduate schools earn 39 percent more than men with undergraduate degrees from Tier 4 schools. Among women with top graduate degrees, those from Tier 1 undergraduate schools earn 44 percent more than women with undergraduate degrees from Tier 4 schools.