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What does the term "highest qualification earned" or "highest degree earned" on applications mean? For example, if I am a current undergraduate student, does that mean my highest qualification is "undergraduate degree" or should it be my "high school diploma"?

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Highest qualification means the most advanced (i.e., highest) academic award (e.g., high school, bachelor's degree, master's degree) that you've been granted (i.e., completed).

So,

if I am a current undergraduate student, does that mean my highest qualification is "undergraduate degree" or should it be my high school (12th grade)?

A current undergraduate student has not yet been granted that undergraduate degree, so the student's highest degree is from high school (assuming no other relevant qualifications).

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    Perhaps this should be contrasted with "highest education attained", which job application forms often ask about. In that case the answers can include e.g. "some high school", "some college" or "some graduate school". – Anyon Jul 23 '19 at 11:11
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The other answer points out the most natural human interpretation of that question and how to respond, but that's not how you should respond. From USAJobs.gov,

What if I’m currently completing my degree?

If you’re currently completing your degree, select the degree and enter in the expected degree completion date.

It's discouraging, but, (job/internship/school/etc) applications are a place to be selling yourself as a candidate, and not necessarily being truthful for the sake of being safe. Or think of this: every other candidate filling in that same application asks themselves this same question you've asked here, and by giving the safe truthful answer you're putting yourself at a disadvantage to those who responded with the higher qualification that they are still completing.

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    There is nothing untruthful about listing a degree in progress so long as it is clearly marked as being in progress by giving an expected completion date in the future. If the "box" is labeled "date," write "expected" before the date to make it very clear. – Bob Brown Feb 9 at 16:02
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    @BobBrown I mean, that's exactly the nitpick here and the reason for this question in the first place, is in the wording of the application. If they're asking about your "highest degree earned" then you haven't "earned" the degree you're currently working on yet – Mike Pierce Feb 9 at 16:17
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In English language academia, qualifications are ranked like this:

  1. Habilitation (not used in English speaking countries)
  2. Doctorate (not used in all disciplines)
  3. Masters (Honours in Australia)
  4. Bachelors
  5. Associates (Mostly in the US)
  6. Secondary/High School

Your highest degree earned is the first one on the list you have completed. Starting a degree does not count. Exceptions apply if you are specifically prompted to enter a future completion date or if you are prompted to select a partially completed degree like "some college."

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