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Re: hyphenation of Grade 2 students

Both are correct.

'Grade 2' is a compound adjective; therefore, it must be grouped in some way to show it is a single adjective.

It is usual to group with hyphens; e.g.

2-seater aircraft, free-range eggs

But, it is also possible to group with title case; e.g.

Billy Elliot tickets; The Queen Mary dock

It is also possible, but unusual, to use more than one method; e.g.

Billy-Elliot tickets

Therefore, Grade-2 would be unusual as it is uses both title case and a hyphen. I do not judge it to be wrong though.

'grade-2 students' (note no capital G) is perfectly correct.

'grade 2 students' (still no capital G) is an error.

Summary:

Grade 2 students is better than Grade-2 students
grade-2 students is correct
grade 2 students is wrong