Some of the most popular graduate degrees don’t pay off financially, study finds

Going to graduate school can boost your career and salary – but some of the most popular advanced degrees are not worth the cost.

That’s one of the main findings of a report released Tuesday by the Postsecondary Education & Economics Research Center at American University.

The report, based on research from the Yale Tobin Center for Economic Policy, found that graduate degrees in medicine, law and pharmacy generally have the highest return on investment. By contrast, degrees in popular fields such as social work, psychology, and curriculum and instruction may actually have a zero to negative return after factoring in the full cost.

“The message is that we need to provide better information to students” about which programs are worth the time and expense, said Joseph Altonji, a Yale University economist and one of the report’s authors.

The study comes at a time when the Trump administration and many education advocates have urged people to carefully consider the cost of graduate programs before enrolling, particularly if they need to take on student loans.

In December, the Education Department created a tool to highlight the earnings of college graduates when people apply for federal student aid. The agency is also in the midst of crafting regulations to cut off federal aid for college programs whose graduates earn only meager salaries.

The Education Department did not respond to a request for comment.

To figure out whether a degree makes sense financially, the authors tried to calculate how much it would lift someone’s lifetime earnings. They then adjusted that for the amount that earnings probably would have grown anyway and the total cost of attendance, including lost earnings during school and the amount that students could have earned investing the money earmarked for tuition.

The researchers found that earnings close to tripled for students who earned a medical doctorate and increased by more than two-thirds for those who obtained a doctorate in pharmacy (even after factoring in the costs of the education). By contrast, they found only a modest increase for some other degrees (such as architecture and certain kinds of engineering) and no gains for psychology, social work, and curriculum and instruction, after adding in the cost of the university program and any lost earnings.

Economists say it can be tricky to figure out whether a particular graduate program is worth the investment. The earnings vary not only by degree, but also by institution; whether students can continue to work while earning their degree; how likely they are to drop out; and how much they may be able to earn while in school.

Zhengren Zhu, co-author of the report, said many students just look at the earnings for graduates of a program.

“That’s a bad idea,” he said, noting that students at a particular school may have had high salaries even before they enrolled in grad school. That’s often true for elite business programs, for instance.

“At the very least, you should compare what they earned before grad school and what they earn after,” said Zhu, an assistant professor of economics at Vassar College.

The report was based on data from about 800,000 students over nearly three decades at public universities in Texas, where some of the most detailed earnings information is available. But the authors noted the findings were similar to those of a research paper that used data from Ohio.

The latest report also found graduate degrees generally provided a bigger boost to women, full-time students and people who had lower-paying undergraduate degrees. Law and business programs also generally had a better return if they were highly ranked by U.S. News & World Report. The study did not factor in scholarships and other kinds of grants, which can lower the cost for some students and make graduate programs a better deal in some cases. In addition, the study excluded Ph.Ds., which are needed for certain jobs.

Preston Cooper, a senior fellow at the American Enterprise Institute who has also studied the return on investment for higher education, recommended that people try to find out as much as they can about the full cost of a program and how much it helps students boost their salaries. That’s especially true for expensive programs that can lead students to take on debt.

“A graduate degree can benefit you financially in some circumstances, but it is a very risky proposition,” Cooper said. “You want to make sure you are working with all the information.”

Altonji noted that some people pursue additional education for various reasons. Certain careers – including becoming a lawyer, physician, marriage counselor, clinical social worker and school administrator – often require a graduate degree for licensing.

And some students may want a credential for a job they would find personally fulfilling, even if it is not particularly lucrative.

“Money isn’t everything,” Altonji said.

Todd Wallack reports for The Washington Post.