Drop round, hugging student with graduate degree (7)
I believe the answer is:
diploma
'graduate degree' is the definition.
'diploma' can be an answer for 'degree' (I've seen this before). I'm not certain of the 'graduate' bit.
'drop round hugging student' is the wordplay.
'drop' becomes 'dip' (I've seen this before).
'round hugging student' becomes 'loma' (I can't explain this - if you can you should believe this answer much more).
'dip'+'loma'='DIPLOMA'
'with' is the link.
Can you help me to learn more?
(Other definitions for diploma that I've seen before include "degree certificate" , "Degree document" , "What a student seeks" , "Certificate awarded by college for educational attainment" , "Certificate of proficiency" .)