Despite the growing number of students acquiring master’s degrees, there is still little data on the potential earnings associated with graduate programs. Without this information, prospective students cannot make financially-informed decisions before investing in further schooling, according to a new paper by the American Enterprise Institute (AEI).
The report, The Master’s as the New Bachelor’s Degree: In Search of the Labor Market Payoff, showcases program-level data collected from three states and aims to highlight, based on these findings, how crucial it is that this type of information is collected nationwide, specifically to help students escape loan debt.
In the 2011 academic year, about one third of master’s degree students accumulated more than $46,000 of debt, and 40 percent of those students borrowed more than $80,000. These figures do not include the amount of debt these students may have already incurred from their undergraduate studies.
“As the number of master’s degrees has risen, the debt that master’s students are accumulating is escalating,” the authors wrote, “Prospective students need to know their likely earnings to have a better idea of how much they should borrow and their ability to service their loans.”
While the U.S. Census Bureau released some information on the wage outcomes of graduate programs, authors Mark Schneider, visiting scholar at AEI and vice president at the American Institute for Research (AIR), and Jorge Klor de Alva, president of the Nexus Research and Policy Center, argue that its reports are vague and misleading.
In a 2012 paper, the Census published the earnings of students who acquired master’s degrees compared to those with bachelor’s degrees in areas such as business, liberal arts, and social sciences. The authors argue that this data is problematic due to the large discrepancies in earnings within each of these categories. For example, the median earnings for someone with a graduate degree in anthropology is $66,000 and economics is $100,000— yet both majors fell under the category of social sciences.
The Census also released data on the potential lifetime earnings of master’s students, though it did so based on undergraduate majors. The authors argue that this is misleading because students may pursue master’s degrees in fields unrelated to what they studied as undergraduates.
In an effort to gain an understanding of master’s programs and their standing in the labor market, the authors examined programs in three states with data from College Measures, an AIR initiative that works with state governments to identify programs with high-wage earnings.
Not surprisingly, the authors found that in Colorado, Texas, and Florida, programs with the lowest earnings were those related to traditional art and humanities. In all three states, students in these master’s programs earned less than those with bachelor’s and associate degrees in the same fields. For example, students with graduate degrees in sociology, vocational rehabilitation counseling, and criminal justice earned a median wage of around $47,000, while students with bachelor's degrees in those fields earned $53,500.
“While some students may have the passion required to truly master these fields, and while these fields produce many graduates who have careers with high social worth, the labor market clearly does not assign much monetary value to the skills these graduates have mastered,” the authors wrote.
Across all three states, the payoff for the highest earning master’s programs exceeded the payoff for students holding bachelor’s and associate degrees in the same fields. Additionally, the authors found that programs that produced the highest earnings were directly related to the needs of each state. Colorado’s highest paying programs were those in engineering and computer and information studies, reflecting its focus on technology, and those with graduate degrees in engineering and earth studies received high payoffs in Texas, which has a large energy sector.
The authors also noted that there were large differences in students’ earnings in the same fields across different institutions. While the median five-year earnings of a graduate from Texas A&M University-Kingsville is $86,300, a graduate from the University of Houston may be earning $140,000.
The authors argue that it is a federal and state responsibility to collect this type of data, which will help students decide whether they should pursue a master’s degree, which field they should study, and where they should attend school.
“The federal government and the states have the responsibility to increase collection and dissemination of information on program-level outcomes— prospective master’s students, indeed all students, should know before they go,” the authors wrote.
Publication Date: 1/10/2018