Is your master’s degree useless?

New data show a shockingly high proportion of courses are a waste of money

The backs of students wearing mortarboards and robes, posing for photographs ahead of their graduation ceremony at the Royal Festival Hall, London, UK.

Photograph: Getty Images

Nov 18th 2024

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IN THE COMING months millions of people across the northern hemisphere will apply to do postgraduate study. Most will top up an undergraduate qualification with a one- or two- year master’s degree in the hope that this will set them apart in a job market crowded with bachelor’s degrees.

“The number-one reason people get these degrees is insecurity,” reckons Bob Shireman, of The Century Foundation, a left-leaning think tank in New York. “They worry that in order to get a job—or keep their own jobs—they need a master’s degree.” Yet on average these provide a much smaller bump to wages than an undergraduate degree does. And a new body of data and analysis suggest that a shockingly high share of master’s courses leave graduates worse off.

In America close to 40% of workers with a bachelor’s also boast a postgraduate credential of some sort. In the decade to 2021 the number of postgraduate students there increased by 9% even as the number of undergraduates fell by 15%. PhDs required by academics and long professional degrees of the sort needed by doctors and lawyers are becoming more popular. But master’s courses still account for most of the growth.

They are an even bigger business for universities in Britain, which hand out four postgraduate degrees for every five undergraduate ones. This has much to do with a boom in master’s students from places such as India and Nigeria. Britons have been getting in on the action, too. The annual number enrolling in taught master’s courses has increased by about 60% over 15 years.

In part this has been driven by employers demanding higher qualifications as jobs in science and technology, in particular, grow more complex. But universities are also keen. In Britain, undergraduate fees are capped by the government and have barely increased in a decade. Enrolling more postgraduates—who may be charged whatever the market will bear—is one way to cope. America’s university-aged population will soon start declining. College presidents there hope that repeat customers can keep their institutions afloat.

Since 2000 the cost of postgraduate study in America has more than tripled in real terms, according to the Centre on Education and the Workforce at Georgetown University. The median borrower now acquires around $50,000 in debt while completing their second degree, up from $34,000 20 years earlier (in 2022 dollars). Almost half of the money America’s government lends to students goes to postgraduates, even though they are only about 17% of learners. In Britain domestic master’s students paid about £9,500 ($13,000) a year in 2021, some 60% higher than in 2011 after accounting for inflation.

Students have put up with these fees in part because they assume that lofty credentials will usually increase their earnings. “Gaining a financial return is not the only reason to pursue education,” acknowledges Beth Akers of the American Enterprise Institute, a right-leaning think-tank. But “for the vast majority of students...that is the ambition.” At first glance they are making a reasonable bet. In America, full-time workers with a bachelor’s earn about 70% more than high school graduates. And those who tack on a master’s can expect an additional 18%.

Yet earnings vary enormously by subject and institution. Moreover, postgraduates are usually from richer families and got better grades as undergraduates than did their peers. They would usually do well in life, regardless of additional credentials. Working out the real returns requires comparing the outcomes of this brainy cohort with those of similarly impressive people who decided against further study.

Seen through that lens, the average master’s student will bank no more than $50,000 extra over their lifetime as a result of their qualification, reckons Preston Cooper, an analyst formerly of FREOPP, a think-tank in Austin, Texas, who also considered fees paid and potential earnings forgone while studying. Worse still, students enrolled on about 40% of America’s master’s courses will either make no extra money or incur a financial loss. That is a higher risk than for undergraduate courses, which Mr Cooper believes provide positive returns about 75% of the time.

Because American data remain somewhat patchy, reaching conclusions such as these still involves vast amounts of guesswork. But things are a bit clearer in Britain, where researchers who ask nicely may crunch a database linking the tax histories and educational achievements of millions of young adults. In 2019 analysts at the Institute for Fiscal Studies, a think-tank in London, concluded that one fifth of undergraduates would be better off if they skipped university all together.

More recently the institute has investigated returns to master’s courses—with even more striking results. It has found that, by age 35, master’s graduates earn no more than those with just a bachelor’s (after accounting for their better-off backgrounds and higher prior attainment). That finding was “genuinely surprising” says Jack Britton, one of the study’s authors. It also differed markedly from previous research using less granular data.

On both sides of the Atlantic, choice of subject is the single biggest factor determining whether a master’s boosts earnings. In America returns are especially large in computer science and in engineering. They are slightly smaller in other science, technology and mathematics subjects, in part because an undergraduate degree in these disciplines already bumps up salaries by quite a lot. Teachers who bag graduate degrees in education tend to earn more, even if wages for the profession as a whole are fairly low, because many American school districts automatically raise the pay of those who have them.

More striking are the large negative returns in some subjects. British men who complete master’s degrees in politics earn 10% less in their mid-30s than peers who do the same subject at undergraduate level only. For history the hit to earnings is around 20%; for English it is close to 30% (see chart 1). Many of the people on these courses are targeting careers that they know will be low-earning, but which they think they will enjoy, explains Dr Britton. But some drift into advanced study because they have not yet decided what profession to pursue. It should probably not be a surprise that these people tend to earn less in the medium term than peers who have rocketed straight from bachelor’s courses into jobs.

Chart: The Economist

Choice of institution matters, though in most cases less than is commonly assumed. In America, costs range widely by university. But there is no strong connection between the price of a master’s course and the amount its graduates go on to earn, according to Tomás Monarrez and Jordan Matsudaira from the US Department of Education (see chart 2). “Brand-name schools have realised that they can trade on their reputation to offer programmes that look very prestigious on paper,” says Dr Cooper, “but which don’t have outcomes that justify the hype.”

Chart: The Economist

MBA courses are a notable exception: graduates from the most storied institutions make far more than everyone else. But in other walks of life, acquiring swanky networks while studying is not quite so crucial to success. The upshot is that splurging on an elite university is not nearly as clever as picking a well-priced course somewhere less fancy.

Women have a higher chance than men of getting a boost to earnings from doing a master’s. The British study finds that these qualifications increase earnings for women in 14 out of 31 subject areas: for men that is only true in six of them. This seems surprising: men’s hourly earnings are higher than women’s and the gap widens further with education. But women with higher qualifications do better than women without them because they also tend to work longer hours, particularly when they become parents and are more likely to resist pressure to go part time or stop working.

The poor returns from many master’s degrees should worry applicants. But they also raise thorny questions for governments. In Europe and America politicians have been accused of inadvertently pushing up costs. In 2016 master’s students in Britain became eligible for government-backed loans with generous repayment terms. America’s federal government limits how much it will lend to undergraduates—but since 2006 has permitted postgraduates to borrow whatever their universities choose to charge. In both cases easy money has led to price inflation.

A related debate is whether governments ought to be more picky about what postgraduate courses they fund. In America credit is offered as freely to people studying “underwater basket-weaving” as to those who study law, says Dr Akers. In 2026 profit-making universities could be prevented from enrolling students who borrow federal money in courses that have saddled graduates with unmanageable debt, or which have not boosted their incomes. But the new rules will not be applied to public and non-profit universities, which enroll most students. These institutions will instead simply have to warn applicants about courses with poor returns.

Americans from both the right and left of politics agree that graduate education is “a bit out of control”, says Mr Shireman. That could make it easier to make changes to, say, the postgraduate loan system. But it remains to be seen how the incoming administration will choose to handle these issues, says Dr Akers. The worry, she says, is that Donald Trump’s team might “focus more on publicly shaming institutions that are bastions of progressivism, than on thoughtful reform”. ■

(http://www.autoadmit.com/thread.php?thread_id=5636779&forum_id=2\u0026mark_id=5310919",#48355889)

i think with US u have to do a Masters in CS to get a three year work visa but getting PR is basically impossible (as a turd)

(http://www.autoadmit.com/thread.php?thread_id=5636779&forum_id=2\u0026mark_id=5310919",#48355977)

shocking to whom?

(http://www.autoadmit.com/thread.php?thread_id=5636779&forum_id=2\u0026mark_id=5310919",#48356008)

(http://www.autoadmit.com/thread.php?thread_id=5636779&forum_id=2\u0026mark_id=5310919",#48356233)

its the bigges tscam, US entire education system is a big scam

(http://www.autoadmit.com/thread.php?thread_id=5636779&forum_id=2\u0026mark_id=5310919",#48356244)