Despite growth in the number of graduate degrees conferred, students have lacked vital information on the economic value of an advanced degree. A recent American Enterprise Institute report uses new data from Colorado, Florida and Texas to show that future earnings depend on the field of study.
The highest-paid graduates earned master’s degrees in fields such as business, information technology, engineering or real estate. Master’s graduates in areas such as philosophy, art and early childhood education have the lowest median incomes—often less than graduates with bachelor’s or even associate degrees in more lucrative fields.
Receiving a graduate degree in a field that does not reward the significant expense with a corresponding rise in wages is a poor return on investment, says AEI visiting scholar Mark Schneider, who authored the report, “The Master’s as the New Bachelor’s Degree: In Search of the Labor Market Payoff.”
States have a responsibility to provide data that informs students and colleges about “wage outcomes” of graduate programs, he adds. “The problem is everyone thinks they are going to beat the odds,” says Schneider, who is vice president and an institute fellow at American Institutes for Research.
“There’s hardly any bonus at all for earning an advanced degree.”
State economies also matter. For example, Colorado and Texas have strong energy sectors that can generate high wages for master’s graduates. In contrast, the opportunities for employment and high salaries are lower for master’s graduates in Florida due to the state’s service-dominated economy.
Federal data collection efforts have been seen as inadequate. The American Community Survey from the U.S. Census Bureau reports wages by field of study for bachelor’s graduates and the National Science Foundation has similar data on the salaries of Ph.D.s. Yet hundreds of thousands of master’s students are without wage data.
This has implications for rising student debt. In the 2011-12 academic year, about one-third of master’s students had cumulative debt above $46,000, according to data from the Department of Education’s National Postsecondary Student Aid Study.