Graduate Degrees Offer High Rewards and Rising Risks

Title: Graduate Degrees: Risky and Unequal Paths to the Top

Authors: Artem Gulish, Catherine Morris, Ban Cheah, and Jeff Strohl

Source: Georgetown University Center on Education and the Workforce

For generations, graduate degrees have been seen as a reliable pathway to career advancement and financial stability. However, a new report from Georgetown University’s Center on Education and the Workforce (CEW) raises serious concerns about the financial risks and unequal benefits of these programs. The study, which analyzed earnings and debt data for a wide range of graduate programs, found that while some degrees continue to offer a strong return on investment, others are leaving students with debt they struggle to repay based on their post-graduation earnings.

The rising cost of graduate education

On average, people with a graduate degree earn significantly more than those with just a bachelor’s degree. However, these higher earnings come with a rapidly increasing cost:

• The median yearly net tuition and fees more than tripled since 2000, reaching $10,000 in 2020.
• For graduate student borrowers, the median debt has jumped from $34,000 in 2000 to $50,000 in 2020.
• Earnings gains differ greatly by field, with some graduates unable to repay their loans.

The report points to unlimited borrowing through Grad PLUS loans as a key factor. These loans can cover the full cost of attendance, which may encourage schools to raise prices without expanding access or improving outcomes.

Many programs fall short

The report suggests a new accountability system based on graduates’ ability to repay debt and earn more than those with just a bachelor’s degree in the same field and state. A large number of graduate programs wouldn’t pass this test. Among programs with available data:

• Forty-one percent of master’s and 67 percent of professional degree programs would fail CEW’s proposed debt-to-earnings standard, which requires that median graduate loan payments not exceed 10 percent of a program’s median post-graduation earnings above the living wage.
• Fourteen percent of master’s programs and 4 percent of professional degree programs would fail the in-field earnings premium, which requires that program alumni earn at least 5 percent more than bachelor’s degree holders in the same field and state.

Programs in important but lower-paying fields like education, social services, and the humanities struggled the most to meet these benchmarks—a pressing concern given labor shortages in these areas.

Changes needed to protect graduate education

The report calls for changes to keep graduate degrees a reliable path to economic mobility:

• Link Grad PLUS loan access to program performance on debt and earnings measures
• Provide targeted state and federal grants for students in high-value but lower-paying fields like teaching and social work
• Obligate programs to share data on completion rates, loan repayment rates, job outcomes, and licensing requirements
• Use pass/fail ratings for small programs on key outcomes like the in-field earnings premium and debt-to-earnings tests to guard students’ privacy while informing prospective students
• Require institutions to report the same data on graduate programs as they do for undergraduate programs, including demographic information to enable assessment of equity gaps

Through smart regulation and funding, policymakers must ensure graduate education remains a dependable route to success. Advanced degrees are too important—for individual opportunity and America’s economic future—to let them be undermined by untenable debt.

To read the full report from CEW Georgetown, click here. You can also find the executive summary and the press release for more information

—Alex Zhao