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Tuesday, April 1, 2014

Your GPA Could Impact Your Income





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It's no secret that if you goof off in college and end up with a low grade point average, you will probably kill your chances of going to an elite graduate school. But did you know that a lower GPA would likely cost you in salary and bonus as well?
That certainly seems to be the case, according to a new study of compensation in investment banking by WallStreetOasis.com. The study is based on the responses of 3,401 employees of both large and small investment banking firms who voluntarily reported their pay to the website.
A third-year analyst made average total compensation of $65,000, if the person's GPA was 2.8 or less, compared to $77,700 for a GPA of 2.9 to 3.1. The 'A' student, with a GPA of 3.8 to 4.0, pulled down average total comp of $115,700--a more than $50,000 a year premium over the 2.8 or lower graduate.
The grades you earn during your undergraduate years also strongly correlate with associates--the typical entry level jobs available to MBA graduates. A first-year associate in investment banking, the study showed, made average total comp of $79,700 if his or her GPA was 2.9 to 3.1, or $99,700 for a GPA of 3.2 to 3.4. Just a slightly higher GPA, at 3.5 to 3.7, would increase total pay to $137,400.
"GPA is a pretty good indication of the bonus that the analyst will receive," explains Patrick Curtis, founder and editor of WallStreetOasis. "That seems to be true up until you get to about the high, high end and the low, low end. i doubt it’s because they know the GPA. No one is thinking of your GPA when they are deciding your bonus number. It’s more about how hard you worked or whether you are a team player. Some of it has to do with selection bias. Higher GPAs tend to go to the higher paying firms. Lower GPAs may be at regional banks that pay less.

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John A. Byrne
"John A. Byrne

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