Graduate degrees can help boost earnings and improve career opportunities, but they can also be high-risk investments given rising tuition costs and student debt.
In fact, the overall wage premium for graduate degrees relative to bachelor’s degrees hasn’t changed much in decades, but the inflation-adjusted cost of obtaining a graduate degree has increased over 200%, according to a recent report from the Center for Education and the Workforce (CEW) at Georgetown University.
With the current unemployment rate for recent college graduates at 5.3%, which is up from 4.3% last January, some college graduates are weighing whether grad school is a better option than trying to find a job in a tight labor market. To answer that question, the CEW examined median earnings, costs, and debt across different types of graduate degrees in different fields, along with graduate degree attainment and earnings outcomes by race/ethnicity and gender.
“Due to scientific and technological advancements, the economy of the future will increasingly require professionals with advanced degrees, but graduate costs have increased 233% since 2000,” said CEW Director and report co-author Jeff Strohl. “The current trajectories of cost and debt put graduate education out of reach for too many students.”
The CEW’s analysis of programs with available earnings and debt data in the College Scorecard reveals that 41% of master’s degree programs and 67% of professional degree programs would fail a debt-to-earnings test, meaning the graduates are not earning enough to repay their student loans. These poor outcomes occur at all types of institutions, including flagship public universities and Ivy League schools, and across all academic disciplines.
The fields of study with the largest numbers of programs that would fail debt-to-earnings tests include social work, teacher education, psychology, counseling, music, religious and theological studies, law, and some allied health professions, according to the CEW report, Graduate Degrees: Risky and Unequal Paths to the Top.
But broad aggregate numbers can also be misleading when further variation at the program level isn’t considered. For example, outcomes for graduates in computer sciences, which is traditionally seen as a high-earning field within STEM, can vary greatly. At the top end, graduates of some master’s programs in computer science make more than $200,000 just four years after completing their degree. But at many other computer science programs, graduates’ median earnings fall short of six figures.
Beyond computer science, CEW’s online data tool reveals high variation in many other fields—such as health and medical administrative services, where earnings can range from $53,000 to $255,000. Therefore, with so much variation even within some of the most lucrative fields, prospective students should carefully consider all available information—including program-level costs and debt and earnings—before deciding where to commit their time and money, the CEW report said.
The CEW report proposed improvements to transparency and accountability in graduate education through a new regulatory framework for federal Grad PLUS loan eligibility that builds upon the US Department of Education’s 2023 Gainful Employment and Financial Value Transparency Regulations.
The CEW proposes that graduate programs—including master’s, professional, and doctoral degrees—undergo both an in-field earnings premium test and a debt-to-earnings test.
For a program to pass the in-field earnings premium test, its graduates would need median earnings that exceed the median earnings of young workers with a bachelor’s degree in the same broad field of study and state. To pass the debt-to-earnings test, graduates’ median federal loan payments would need to be less than 10% of their median discretionary earnings.
Under the CEW’s proposed regulatory framework, all programs would be required to notify potential students of the program’s performance on these tests, and if a program fails either test for two out of three consecutive years, students would lose eligibility for Grad PLUS loans.
To further improve transparency, CEW researchers recommend that the Department of Education consider instituting a pass/fail approach using our proposed in-field earnings premium and debt-to-earnings tests for smaller graduate programs for which earnings and debt data are currently unavailable due to student privacy concerns.
“Some critics call for ending the Grad PLUS program altogether, but this would be akin to using a hatchet when a scalpel is a more appropriate tool,” said Artem Gulish, lead author of the report and senior federal policy advisor at CEW. “Our approach would ensure that valuable programs can continue to operate, while putting the brakes on runaway costs and borrowing.”
Some of the worst-performing programs fall under the broad field of education and public service—representing professions that are critical to a well-functioning society, the report said.
“Social work, student counseling and personnel services, and teacher education and professional development have high numbers of master’s programs that would fail our proposed debt-to-earnings test,” said Catherine Morris, co-author of the report. “We recommend that federal and state governments fund targeted grant programs to support graduate education in fields leading to work in these critical yet often underpaid professions.”
Go here to view the full report and a searchable online data tool on graduate degree outcomes.
