millennials and gen zers are getting swindled by the biggest scam in higher education
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millennials and gen zers are getting swindled by the biggest scam in higher education
millennials and gen zers are getting swindled by the biggest scam in higher education
millennials and gen zers are getting swindled by the biggest scam in higher education
Master's Degrees Are the Biggest Scam in Higher Education, College
Research shows that many master's degrees — including 62% of MBAs, by one estimate — have zero effect on a grad's lifetime earnings.
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Millennials and Gen Zers are getting swindled by the biggest scam in higher education
Research shows that many master's degrees — including 62% of MBAs, by one estimate — have zero effect on a grad's lifetime earnings. iStock; Rebecca Zisser/Insider
James S. Murphy
May 22, 2022, 11:00 AM
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It's graduation season. Over the past couple weeks, some 2 million college students have earned their bachelor's degrees and headed off to the next stage of
Master’s Degrees Are the Biggest Scam in Higher Education, College & More Breaking News
It’s graduation season. Over the past couple weeks, some 2 million college students have earned their bachelor’s degrees and headed off to the next stage of their lives. For many, that next stage will be … back on campus, in a grad program, most likely gunning for a master’s degree. And for a sizable chunk of them, that decision will turn out to be a catastrophic error.
Millennials and Gen Zers have been told that a master’s degree is the new bachelor’s — meaning the minimum level of education needed to land a prestigious, well-paying job. But new research indicates that this advice is misleading at best, and cynical at worst. Many master’s degrees not only fail to deliver on the promise of better employment, they also leave their over-educated recipients saddled with crippling, lifelong debt.
More than 3 million students were enrolled in a graduate program in 2020. That’s a million more than there were in 2000. Over those two decades, the number of master’s degrees awarded almost doubled. And as the number of master’s students has soared, so has their share of total student loan debt. Although master’s students account for only 12% of all college-goers, the higher price tags on their degrees mean they’re burdened with 26% of all student debt. Bachelor’s students with federal loans owe an average of $32,000 upon graduation. Master’s students owe $65,000.
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This towering debt, combined with the often modest earnings potential that many advanced degrees deliver, means that many master’s programs make no financial sense whatsoever. Despite the fancy degree, you wind up owing more without earning more. So why do so many people keep wasting their money on these worthless pieces of paper?
Winners and losers
A look at the earnings data makes it easy to see why so many millennials and Gen Zers are drawn to grad school. If you get a medical or dental degree, you make 45% more, on average, than you would with only a bachelor’s. Same for law degrees (although that’s more likely to be true if you attend a highly selective law school). PhDs, too, generally lead to significantly higher salaries, although there are large differences depending on the field.
The problem is that most grad students aren’t getting MDs, JDs, or PhDs. They’re getting master’s degrees.
Sure, people with a master’s earn more, on average, than those with just a bachelor’s degree — but only by 18%. And when you look at the numbers by individual graduate programs, the potential payoff plunges even further. Preston Cooper, a researcher at the Foundation for Research on Equal Opportunity, recently measured the return on investment of nearly 14,000 grad programs. He found plenty of evidence that medical school, law school, and dental school are worth it, and that master’s degrees in computer science, engineering, and nursing tend to pay off. But he also found that 40% of master’s degrees have no return at all on lifetime earnings — none.
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What are the most financially worthless degrees? That honor goes to master’s in the arts, humanities, and theology: 85% of those degrees have a negative return on investment. You could make an argument about the inherent value of knowledge, of course, but that’s not likely to impress whatever credit agency comes knocking to collect your student loan debt. It doesn’t take a master’s degree in the arts to see that a master’s degree in the arts will leave you worse off, financially, over the course of your lifetime.
Even more surprising, Cooper found that 62% of MBAs — the most popular of all master’s degrees — provide no return on investment. The payoff was also pretty lousy for a master’s in education, the second most popular degree: 32% of M.Ed. programs have a negative return on investment.
The financial picture is even bleaker than those numbers suggest. Cooper did not include student loan debt in his calculations, because the higher price of master’s degrees would have skewed the data. But debt ultimately plays a huge role in determining the financial value of a degree, because it delays the accumulation of wealth. Students who spend years or decades servicing $70,000 in master’s debt — often on top of undergraduate debt — are unable to buy a home or save for retirement until later in life, if ever. One borrower I spoke to sardonically calls her student loan debt “my home,” since she knows it will be decades before she can purchase real estate.
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The bottom line: An appalling percentage of people who enroll in master’s programs every year would be much better off if they had just kept working and never gone back to school at all.
What’s driving the scam
So why should we care? After all, no one is forcing anyone to get a master’s degree in Happiness Studies (tuition and fees: $17,700), Applied Positive Psychology (tuition and fees: $71,784), or Conflict Resolution (tuition and fees: $80,227). If students want to get a degree that will leave them deep in debt and unable to save for retirement, who’s to stop them? The heart wants what the heart wants, and no amount of cold hard data will change that for many people, as Cooper’s own Ph.D. in economics from George Mason University — return on investment: negative $440,000 — demonstrates.
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