While Graduate Degrees Yield the Highest Median Earnings of All Educational Credentials, Costs Have Tripled Since 2000, Georgetown University Report Says
September 25 2024 - 12:01AM
Higher earnings, lower unemployment rates, career advancement, and
a genuine curiosity for learning all drive interest in graduate
education, but high costs and rising student debt levels undermine
the perceived value of graduate degrees. Without clear information
about degree programs’ debt and earnings outcomes, prospective
students are unable to make informed choices about their graduate
education and future careers, and policymakers are unable to hold
graduate programs accountable for leaving program completers in
precarious financial positions.
Graduate Degrees: Risky and Unequal Paths to the Top examines
median earnings, costs, and debt across different types of graduate
degrees in different fields of study, along with equity gaps in
graduate degree attainment and earnings outcomes by race/ethnicity
and gender. The report, supported by Arnold Ventures, also proposes
improvements to transparency and accountability in graduate
education through a new regulatory framework for Grad PLUS loan
eligibility. This framework builds upon the US Department of
Education’s 2023 Gainful Employment (GE) and Financial Value
Transparency (FVT) Regulations.
Graduate students have two federal loan financing options:
Direct Unsubsidized Stafford loans and Grad PLUS loans. While
Stafford loans currently make up a larger portion of total graduate
student loan disbursements (68%) compared to Grad PLUS loans (32%),
the latter have a greater potential to exacerbate the ongoing
student debt crisis. Grad PLUS loans broaden access to graduate
education and provide financing options with more protections than
the private loan market. But unlike Stafford loans that have
aggregate limits, Grad PLUS loans are limited only by the cost of
attendance.
“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. The
current trajectories of cost and debt put graduate education out of
reach for too many students,” said CEW Director and report
co-author Jeff Strohl. “Grad PLUS loans are an important resource
for many graduate students who may not otherwise have access to
private lending. But they can also be a source of excessive
debt—limited only by the cost of attendance, which universities
have few incentives to rein in.”
To better regulate federal graduate student loans, CEW
researchers propose 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. For a program to pass the debt-to-earnings test, its
graduates’ median federal loan payments would need to be less than
10% of their median discretionary earnings.
Under CEW researchers’ proposed regulatory framework, all
programs would be required to notify potential students of their
performance on these tests, and if a program fails either test for
two out of three consecutive academic years, its 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.”
CEW’s evaluation of programs with available data in the College
Scorecard reveals that 14% of master’s degree programs and 4% of
professional degree programs would fail the proposed in-field
earnings premium test. Among graduate programs with available data,
41% of master’s degrees and 67% of professional degree programs
would fail the proposed debt-to-earnings test. The fields of study
with the largest numbers of programs that would fail the proposed
tests include social work, teacher education, psychology,
counseling, music, religious and theological studies, law, and some
allied health professions.
“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. 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, report co-author and senior editor/writer at CEW. “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.”
In some cases, graduate education worsens existing earnings
disparities. Median earnings among Black/African American and
Hispanic/Latino workers with graduate degrees are $16,000 below the
median among all workers with graduate degrees. And while women are
more likely to attain graduate degrees than men, the gender wage
gap is larger among graduate degree holders than among workers with
lower levels of educational attainment. Occupational segregation
and in-field earnings disparities both contribute to greater
earnings inequality.
“Students and taxpayers invest staggering amounts of money in
higher education, raising important questions about program value,”
said Kelly McManus, Arnold Ventures’ vice president of higher
education. “Arnold Ventures is proud to support CEW’s important
research into these issues and the identified reforms that can
preserve access and prevent families from having to take on
unmanageable debt.”
To view the full report and a searchable online data tool on
graduate degree outcomes, visit:
https://cew.georgetown.edu/graduatedegrees.
The Georgetown University Center on Education and the Workforce
(CEW) is a research and policy institute within Georgetown's
McCourt School of Public Policy that studies the links between
education, career qualifications, and workforce demands. For more
information, visit https://cew.georgetown.edu/. Follow CEW on X
@GeorgetownCEW, Instagram, YouTube, LinkedIn, and Medium.
Katherine Hazelrigg
Georgetown University Center on Education and the Workforce
kh1213@georgetown.edu