Are Master’s Degree Programs Ripping Off Students? Maybe Not.
Credit: baona / E+ / Getty Images- Higher education enrollments have risen in recent years thanks largely to graduate programs.
- Enrollment in master’s degree programs has driven this growth.
- Master’s degrees have come under fire for high cost and questionable return on investments.
- A new study suggests financial outcomes aren’t as poor as commonly thought.
Enrollment is up at America’s colleges and universities, the latest statistics tell us.
Yet while last fall’s 4.7% one-year bump in undergraduates is encouraging, it turns out graduate enrollments have been driving overall growth for some time.
Since 2019, graduate student numbers have increased by 3.3%, while undergraduate enrollments remain 1% below pre-pandemic levels.
We can thank the rising popularity of master’s degree programs for this phenomenon. During the 2010s, the number of master’s degrees awarded increased by 19% and now account for 80% of all graduate degrees conferred.
As career-minded students clamor for graduate credentials, universities have been quite happy to accommodate demand. More than 14,000 new master’s degree programs were launched between 2004 and 2023.
But not all of these degrees deliver value.
A 2021 Wall Street Journal exposé revealed that thousands of students had incurred debt loads beyond their capacity to repay them. The promise of increased income didn’t materialize, leaving students disillusioned and on the brink of loan default.
In fact, net prices for master’s degrees have outpaced those for bachelor’s degrees, and because there’s no limit on the amount of federal loans graduate students can borrow, debt has soared. About one-quarter of borrowers owe more than $100,000.
Are master’s degree programs simply cash cows for universities eager to take advantage of students who believe — perhaps erroneously, in many cases — these credentials are tickets to a brighter future? Or do they add real value?
Those questions form the basis of a new study titled “Return on Investment or Ripoff? Examining the Returns to New Master’s Degree Programs.”
Published in January, the paper, authored by Robert Kelchen and Faith Barrett of the University of Tennessee, seeks to determine if returns on investments vary between new and established master’s degree programs and if those returns differ by racial and ethnic diversity and field of study.
The authors examined 1,274 institutions, excluding for-profit colleges, using data from the Department of Education’s College Scorecard to evaluate graduate cohorts from 2014-2020. They paid particular attention to programs enrolling large shares of Black and Latino/a students given concerns that programs launched to serve those populations resulted in “poor labor market outcomes.”
Bear in mind that College Scorecard data on debt and earnings includes only students who received federal loans, excluding the roughly 43% of students who did not, so the return on investment for graduates who absorbed private loans (or paid outright) lies beyond the scope of this study.
Nor does the study account for differences between online and in-person programs or for those run by external online program managers.
Nonetheless, here’s what the researchers found.
At public universities, financial outcomes for graduates of “new” programs, ones established after 2004, were largely similar to those for graduates of existing programs. And among private institutions, outcomes at newer programs were actually more favorable.
What’s more, newer programs serving large numbers of Black and Latino/a students at private universities, especially those in lower-paid social sciences and humanities disciplines, resulted in between 5% and 10% less student debt than older programs with similar levels of diversity.
These newer programs in social sciences, liberal arts, and education demonstrate better debt-to-earnings outcomes — in other words, return on investment — than older programs.
The researchers call this a “notable finding” because these fields “tend to have more modest earnings than other professions and are also often facing scrutiny for the employability of graduates.”
At the same time, newer STEM (science, technology, engineering, and math) programs feature higher levels of student debt. The authors attribute this to the elevated cost of operating more expensive STEM programs.
Overall, new programs were more likely to meet the gainful employment threshold. Again, this study doesn’t include for-profit programs, many of which have been criticized for failing to satisfy gainful employment requirements.
The upshot? This research doesn’t suggest that “all master’s degree programs are financially valuable to students,” the authors conclude, “but it does provide evidence that new offerings at public and private nonprofit institutions are not ripping off students.”
That’s welcome news for universities and students alike and should quell the consistent drumbeat of critics claiming the new wave of master’s degree programs cropping up is simply a scam.