Graduate degrees can enhance career prospects and increase earnings, but they come with financial risks due to rising tuition costs and student debt. According to a report by the Center for Education and the Workforce (CEW) at Georgetown University, the wage premium for graduate degrees compared to bachelor’s degrees has remained stable over decades, while the inflation-adjusted cost of obtaining a graduate degree has risen by over 200%.
The current unemployment rate for recent college graduates is 5.3%, up from 4.3% in January, leading some graduates to consider whether attending grad school is a better option than entering a tight job market. The CEW analyzed median earnings, costs, and debt across various graduate degrees and fields, as well as outcomes based on 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 Jeff Strohl. “The current trajectories of cost and debt put graduate education out of reach for too many students.”
The CEW found that 41% of master’s degree programs and 67% of professional degree programs would fail a debt-to-earnings test. This indicates that graduates are not earning enough to repay their student loans. These issues span all types of institutions, including public universities and Ivy League schools.
Fields with numerous programs failing debt-to-earnings tests include social work, teacher education, psychology, counseling, music, religious studies, law, and some health professions. However, outcomes can vary significantly within fields such as computer science. Some graduates earn more than $200,000 four years post-graduation while others do not reach six figures.
In other fields like health services administration, earnings range from $53,000 to $255,000. Prospective students should evaluate program-level costs and potential earnings before deciding on further education.
The CEW report suggests enhancing transparency in graduate education through new regulations for federal Grad PLUS loan eligibility. Programs would undergo an in-field earnings premium test and a debt-to-earnings test.
Programs must show that graduates' median earnings exceed those of young workers with bachelor’s degrees in similar fields to pass the earnings premium test. To pass the debt-to-earnings test, loan payments should be less than 10% of discretionary earnings.
If a program fails either test two out of three consecutive years under this framework proposed by CEW researchers Artem Gulish stated: “Some critics call for ending the Grad PLUS program altogether... Our approach would ensure that valuable programs can continue to operate while putting brakes on runaway costs.”
Catherine Morris highlighted that some poorly performing programs fall within education and public service sectors: “Social work...and teacher education have high numbers failing our proposed debt-to-earnings test.” She recommended targeted grants supporting these critical yet often underpaid professions.
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