Graduates with artist in city (5)
I believe the answer is:
basra
'city' is the definition.
(I have seen 'Iraqi city' mean 'basra' so perhaps 'city' could also mean 'basra')
'graduates with artist' is the wordplay.
'graduates' becomes 'BAs' (people with Bachelor of Arts degrees).
'with' is a charade indicator (letters next to each other).
'artist' becomes 'RA' (Royal Academician, member of Royal Academy of Arts).
'bas'+'ra'='BASRA'
'in' acts as a link.
(Other definitions for basra that I've seen before include "Chief port of Iraq" , "City in Iraq" , "Iraqi town" , "Iraq's main port" , "South Iraqi oil port" .)