Value of graduate degrees is going down, reports argue

A report from the Urban Institute shows that ‘the median debt among borrowers completing master’s degrees nearly doubled’ from 2000 to 2016.

Analyses of graduate degrees suggest that many programs are ‘cash cows’ for colleges and universities, including online master’s degrees and certificates.

Higher Ed Dive recently shared a report from the Urban Institute on graduate degrees’ return on investment (ROI). The results are not good for the students. 

Data from the Urban Institute shows that “[b]orrowers are taking on more debt to complete their graduate degrees,” and “the typical earnings for workers with graduate degrees have held steady after increasing in the late 1990s and early 2000s,” according to Higher Ed Dive

Undergraduate borrowers didn’t see the same level of increases in their debt loads as graduate students,” Higher Ed Dive reported. “These differences may be chalked up to differing federal student loan policies for undergraduate and graduate students.”

The Urban Institute report said that, adjusted for inflation, “the median debt among borrowers completing master’s degrees nearly doubled” from 2000 to 2016, and “increases for borrowers obtaining professional doctoral degrees or research doctoral degrees roughly doubled.” 

“In contrast, typical debt for borrowers completing bachelor’s degrees increased from $23,953 to $31,966,” the report reads. 

Additionally, master’s degree holders “earned a median salary of $72,512 in 2018” ten years after graduation, whereas “those with a professional degree earned a median of $102,495 that year,” according to Higher Ed Dive

[RELATED: Graduating students are concerned about entering the job market as inflation soars]

Analyses of graduate degrees suggest that many programs are “cash cows” for colleges and universities, including online master’s degrees and certificates. 

An article in Slate described companies that collaborate with universities to create and advertise online graduate programs.

These companies design and operate courses on behalf of schools—sometimes essentially offering a class in a box—that the university can slap its branding on,” Slate reported. “The [online program manager] then takes as much as 70 percent of tuition revenue. That money is largely being funded with government loans, which may never be paid back.”

Former students of the University of Southern California (USC) recently named one of those companies, 2U, in a lawsuit. The lawsuit says that 2U, which received “‘a substantial percentage of tuition,’” helped USC advertise online graduate programs in the Rossier School of Education. The advertisements shared U.S. News & World Report rankings, which relied on doctored data according to the New York Post

Campus Reform contacted USC about the lawsuit. “We disagree with the claims asserted in the lawsuit, which are mostly based on facts that the university already shared with the community,” USC’s statement reads. 

”We stand by our handling of this matter and look forward to defending against these claims in court.”

A 2U spokesperson told Campus Reform that “[t]he Higher Education Act permits the kind of bundled-services agreements discussed in the complaint.”

”It has been the consistent, bipartisan understanding of the Department of Education for three decades, across five presidential administrations,” the 2U spokesperson said. “The Department of Education’s position on this is embodied in a 2011 guidance document making absolutely clear that the Higher Education Act permits bundled-services agreements of the sort entered into by 2U and its partners.” 

report from the American Council on Education (ACE), “a membership organization that mobilizes the higher education community to shape effective public policy,” describes “the Higher Education Act (HEA), first passed in 1965.” 

The HEA is “[t]he primary law through which” the U.S. Department of Education administers its programs, and since 1965, “has been rewritten eight separate times,” according to ACE.  

The 2U spokesperson shared a 2021 transparency report with Campus Reform. The report’s section on University Oversight and Accountability highlights “the institutional independence of [its] nonprofit university partners.” 

”In degree-granting programs, our partners retain control over all core academic functions,” the report reads. The report lists accreditation and tuition as examples of core academic functions. 

The report also lists outcomes, which include data on the graduation rate of “2U-powered degree programs” and 2U’s tech bootcamps. The bootcamp data come from a Gallup survey, which describes the tech bootcamps as “short, full- or part-time non-degree programs that teach students in-demand tech skills in areas such as coding, cybersecurity and fintech,” according to Gallup.  

Another report from the New York Post suggests that students are pursuing graduate degrees to distinguish themselves in the job market. With degree inflation, or the rising percentage of four-year degree holders, “a master’s degree is the new bachelor’s degree.” 

Previous reporting from Campus Reform offers solutions to students concerned with their degrees’ ROI and relevancy in the job market. An op-ed by Higher Education Fellow Nicholas Giordano argued that community colleges are meeting the demand from employers by offering “technical and interpersonal skills.” 

[RELATED: WATCH: Companies ditch four-year degree requirement] 

In addition to diverging from four-year universities, which “push a far-left agenda,” Giordano said that community colleges are less expensive. 

“For the 2021-2022 academic year, the average cost of a public community college was approximately $3,770 per year,” Giordano wrote. “Compare that to a public four-year institution which costs $10,560 per year for in-state tuition and $27,020 for out-of-state tuition.”

Giordano argued that “with the deepening recession, and as more Americans question the value of four-year institutions, community college is a better and more viable alternative for many.”

Campus Reform contacted the Urban Institute and U.S. News & World Report. This article will be updated accordingly.