Are You Losing Money on Graduate Degrees?

Research Implications

In the often-murky field of graduate education, experts suggest reports such as this—focused on student financial outcomes—can shine a light that helps students avoid monetary pitfalls.

“This report is a great contribution to the value-of-college discussion,” Andrew Gillen, senior policy analyst at the Texas Public Policy Foundation, said via email. “While you can always quibble with how any estimate is conducted, the report takes reasonable positions on all the important factors (estimating future earnings, accounting for costs, using a discount rate to convert future earnings into present value, etc.). The finding that 40% of graduate programs have a negative ROI is consistent with other estimates, but this result, while not necessarily new to the research community, will be surprising to the general public, which tends to default to the mistaken impression that any and all educational investments are good investments.”

Gillen added that university leaders also stand to benefit from such research.

“Universities should be seriously considering winding down programs that leave their students worse off financially,” Gillen wrote. “This isn’t written in stone—nobody is majoring in theatre to get rich, so a negative ROI for a theatre program is less objectionable than a negative ROI for a more vocational program, like an MBA program. But that is not a blanket waiver for any program with a negative ROI, and such programs should come with lots of warning labels to ensure students are aware of the financial implications of enrolling.”

Michelle Dimino, education senior policy adviser at the think tank Third Way, noted that with limited data available on graduate programs, students are often making risky assumptions about potential earnings. The report adds welcome “transparency and nuance” to the ROI conversation, she said.

“There’s practically no accountability for graduate programs, and that’s something federal policymakers will need to grapple with sooner or later as concerns around high costs and high debt continue to mount,” Dimino wrote in an email. “Colleges and universities, which currently have little incentive to keep graduate tuition rates low, shouldn’t be surprised to find students more actively questioning the value proposition of their degrees and should recognize the imperative to deliver high-quality programs that show strong outcomes.”

Though the report is heavily focused on ROI, Cooper concedes that attending a graduate program isn’t always about the money. Most people, after all, don’t go into academia to get rich. But he does hope that those entering professions that pay on the lower end use the report to determine exactly what they’re willing to sacrifice financially to pursue their passions.

“Are you willing to give up $10,000 a year to pursue your dreams of being a college professor? Maybe. Are you willing to give up $30,000 a year to pursue those dreams? Possibly not,” Cooper said. “I think that even if you are going to graduate school for reasons that aren’t about the money, it’s still important to be aware of the financial value and the financial consequences of choosing graduate school tracks, because it will help you make a better decision.”