This paper examines if universities in the UK mediate the impacts of spatial inequalities on earnings disparities among similar graduates and provides new evidence on the persistent income inequality at the neighbourhood level, using the Destination of Leavers from Higher Education (DLHE) survey data on the population of individuals graduating from universities in 2012/13. The results suggest that graduates from neighbourhoods with the highest university participation rate, on average, have higher earnings than those from the lowest-participation neighbourhoods, holding demographic features and university-related factors constant. The earnings gap by the neighbourhood quality remains substantial so that males with a degree from the Russell Group from the lowest-participation neighbourhoods barely earn higher incomes than their counterparts from the highest-participation areas who attended a less prestigious university. These results imply that universities in the UK do not fully level the playing field in terms of earnings disparities among graduates from different neighbourhoods.