05/02/2022

Is Grad School Worth It? A Comprehensive Return on Investment Analysis

Written By:

Preston Cooper

The net financial value of most graduate degrees is modest to negative.

Blog Article
Is Grad School Worth It? A Comprehensive Return on Investment Analysis

Key findings

  • This report estimates return on investment (ROI) — the increase in lifetime earnings minus the costs of attending school — for nearly 14,000 graduate degrees.
  • The median master’s degree has a net ROI of $83,000. But some master’s degrees are worth over $1 million, while 40 percent have no net financial value at all.
  • Most master’s programs in computer science, engineering, and nursing boast ROI above $500,000. But the median degree in several other fields — including the MBA, America’s most popular graduate degree — has negative ROI.
  • The most lucrative graduate degrees are professional programs in law and medicine; almost half of medical degrees have ROI above $1 million.

Executive Summary

The number of students pursuing graduate school has increased markedly in the past two decades, and the COVID-19 pandemic has accelerated the trend. Surveys show that most students seeking a graduate degree are doing so to advance their careers. But simply earning a graduate degree does not guarantee a financial return; only some degrees increase students’ net lifetime income and many programs make their students worse off.

This report presents estimates of return on investment (ROI) for nearly 14,000 graduate degree programs, including 11,600 master’s degrees and 2,300 doctoral and professional degrees.

In financial markets, ROI measures the profitability of an investment relative to its cost. In our study, we define the ROI of a graduate degree as the increase in lifetime earnings a student can expect from that degree, minus the direct and indirect costs of attending graduate school.

I estimate that the median master’s degree increases lifetime earnings by $83,000, after subtracting the costs of graduate school. However, there is enormous variation by program. Master’s degrees in engineering, computer science, and nursing virtually guarantee their graduates a financial return. But programs in the arts and humanities rarely pay off at all. Overall, 40 percent of master’s degrees fail to produce a positive return.

In financial markets, ROI measures the profitability of an investment relative to its cost. In our study, we define the ROI of a graduate degree as the increase in lifetime earnings a student can expect from that degree, minus the direct and indirect costs of attending graduate school.

Doctoral and professional degrees tend to perform better. The majority of professional degrees in law and medicine generate a lifetime financial return exceeding $500,000. Overall, 86 percent of advanced degrees have positive ROI. The exceptions are PhD programs in education and other non-STEM fields.

The ROI estimates presented here can help prospective students navigate whether going to graduate school is the right financial decision — it often isn’t. The estimates may also be of interest to other stakeholders, including policymakers, trustees, and university staff. I also provide estimates of ROI adjusting for average graduate school completion rates and universities’ underlying expenditures. The full dataset, which includes these measures of ROI for all 14,000 graduate programs, is available here.

Master’s degrees in engineering, computer science, and nursing virtually guarantee their graduates a financial return. But programs in the arts and humanities rarely pay off at all. Overall, 40 percent of master’s degrees fail to produce a positive return.

Graduate degrees can drive career advancement

If a bachelor’s degree is perceived as a ticket to upward mobility, then a graduate degree is often seen as a first-class seat. The vast majority of students who pursue a graduate degree in virtually every field say they are doing so for career advancement. This perception is driving the increasing numbers of students pursuing graduate school even as overall college enrollment is falling.

This report seeks to determine the net economic value of a graduate degree by estimating return on investment (ROI) for nearly 14,000 graduate credentials at 1,441 universities across the United States. ROI compares the main financial benefit of graduate school — the increase in lifetime income attributable to the degree — to the costs, which include both tuition and foregone earnings while enrolled.

This study assesses ROI for several different types of graduate degrees. These include master’s degrees, which are one- to two-year programs that aim to confer “mastery” of a certain subject area, as well as advanced degrees. Advanced degrees include both professional degree programs in fields like law and medicine, as well as doctoral degrees such as PhDs. Advanced degree programs can range from three to five years or more.

At the bachelor’s degree level, students typically approach college as a choice between different majors. The decision framework is different at the graduate level. A student with a bachelor’s degree in music will rarely pursue a master’s degree in physics. Instead, the choice around a graduate degree is usually binary: should I interrupt my career to pursue a master’s or advanced degree in my field, or simply continue working?

Whether the decision to pursue a master’s degree is financially sound primarily depends on the field of study. The median master’s degree increases lifetime earnings by roughly $83,000 after accounting for the costs of graduate school. But master’s degrees in certain fields have much higher returns. The median master’s degree in computer science or engineering increases net lifetime earnings by over $900,000. At the other end of the spectrum, a master’s degree in the arts or humanities has a median return of negative $400,000.

Advanced degrees typically have a higher return than master’s degrees. Most professional degrees in law or medicine are worth more than $500,000. There’s also a long “upper tail” of professional programs that yield eye-popping lifetime returns. Twenty-five advanced degrees — all of them in law or medical fields — yield a median ROI of $3.8 million or more.

But a longer graduate program doesn’t always translate into higher ROI. Most PhD programs, excepting those in STEM fields, have negative financial returns. The earnings gains from an advanced degree must be truly lucrative to justify an investment of four years or more.

Overall, 14 percent of advanced degrees and 40 percent of master’s degrees have a negative financial return. Those figures assume that graduate students complete their programs on time. When accounting for the risk of non-completion, the share of negative-ROI programs rises slightly.

The ROI analysis leverages a new dataset, the program-level College Scorecard, to estimate earnings for recent graduates of nearly 14,000 different graduate degree programs. I use data from the U.S. Census Bureau to extrapolate Scorecard earnings over graduates’ careers. The analysis also estimates a counterfactual earnings profile, adjusting for demographics, local labor markets, student ability, and undergraduate majors. This counterfactual allows us to isolate the portion of earnings that are truly attributable to graduate degrees.

This analysis builds on previous work I have published at the Foundation for Research on Equal Opportunity regarding the ROI of bachelor’s degrees. My prior work found that the median bachelor’s degree has an ROI of $306,000, which drops to $129,000 after adjusting for the many students who do not finish their degree programs. Like graduate degrees, bachelor’s degrees have an uneven return. While programs in STEM, economics, business, and nursing can be worth millions, bachelor’s degrees in art, music, philosophy, and psychology usually have negative ROI.

Granted, the financial value of graduate school is not everything. Some degrees may attract students for non-financial reasons; a PhD student, for instance, might be willing to give up some earnings potential to pursue her dreams of academia. But individual financial returns are by far the biggest concern for most students considering graduate school. While some undergraduate students see bachelor’s degrees as a consumption good, graduate degrees are almost always viewed as an investment in future earnings capacity.

The estimates presented in this report can help prospective graduate students decide whether to attend graduate school, as well as help them choose between different programs. Graduate school is a significant investment — graduates’ student debt burdens are far greater than undergraduates’ — and it does not always pay off. To understand why, consider the earnings associated with each type of graduate degrees.

What do graduate students earn?

People with graduate degrees earn more than any other educational group. Those with master’s degrees have roughly double the earnings of people with only a high school degree, and master’s degree holders earn 20 percent more than those who stopped at a bachelor’s degree. Individuals with advanced degrees earn 45 percent more than people with only a bachelor’s degree.

This is part of the reason that the number of people earning master’s degrees has risen sharply: people say they want a graduate degree to advance their careers, and the higher earnings associated with these credentials makes them seem worth it.

But there’s considerable variation behind those rosy average earnings. Not all graduate degrees pay more than a bachelor’s degree. The College Scorecard, a U.S. Department of Education dataset, gives insight into this variation. The Scorecard reports median earnings for graduates of 11,600 master’s degree programs, 1,600 doctoral programs and 700 professional programs.

However, the Scorecard has a major limitation: it only reports median earnings for the first two years after graduation, which may not be representative of lifetime earnings. For instance, medical school graduates enter residencies after graduation, during which their low pay belies the typically high salaries that await them later in their careers. I therefore use the American Community Survey (ACS) to extrapolate Scorecard earnings throughout graduates’ careers. More details are available in the methodology article accompanying this report.

The College Scorecard has a major limitation: it only reports median earnings for the first two years after graduation, which may not be representative of lifetime earnings.

The differences in earnings by graduate degree are substantial, and not all graduate degrees are lucrative. Graduates of professional degree programs in medicine, dentistry, and comparable fields typically reach earnings of $137,000 by age 45. At the master’s degree level, programs in computer science and engineering produce median earnings above $144,000 by mid-career. Other master’s degrees with strong earnings outcomes include nursing and business. (All figures in this report are weighted by the number of graduates.)

However, master’s degrees in psychology, social work, education, and the arts all have median earnings below $60,000 at age 45. While that’s above the U.S. median personal income, it’s quite low for people with graduate degrees during their peak earning years.

 

Earnings immediately after graduation can be misleading. For instance, graduates of Master of Business Administration (MBA) programs and graduates of medical programs both have median earnings close to $67,000 in the first two years after finishing their degrees. But by age 45, people with medical degrees have seen their median earnings balloon to $137,000, while MBA graduates earn only $88,000.

Analyzing earnings data using medians rather than averages is important. Graduate programs have a long “upper tail,” meaning there are a handful of programs at the very top of the earnings distribution which drag up averages. Ten programs — eight in law and two in dentistry — produce earnings above $400,000 for their graduates by age 45. These upper-tail programs have a significant impact when averaging across programs.

For example, earnings for graduates of law programs exceed $155,000 when averaging across the 225 law degrees in the dataset. But median earnings across these law programs are just $118,000. The lucrative earnings often associated with law degrees are concentrated among a small number of elite programs. This phenomenon may skew the public perception of these degrees’ value. It is thus important to recognize that not all programs in the same field can guarantee stellar earnings.

Use the searchable table below to find estimated earnings for your graduate program both immediately after graduation and at age 45.

 

Earnings are an important component of the financial value of graduate school. But they are only one half of the ROI equation. To calculate the true economic value of graduate degrees, we also need to consider costs.

What is the cost (and opportunity cost) of graduate school?

High earnings are not enough to prove a graduate program’s financial value. If a degree is to provide its students with positive ROI, graduates’ earnings must justify the costs.

Up front, graduate schools have steep tuition prices. Financial aid at the graduate level is usually far less generous than aid to undergraduates. In fact, many universities rely on graduate programs to cross-subsidize their undergraduates. To calculate ROI, I estimate net tuition for each program. For graduate programs, average net tuition is generally between 70 percent and 90 percent of the published price (though some degrees, such as PhDs, typically have far lower net prices relative to published tuition).

The median master’s degree program in the Scorecard dataset charges roughly $11,000 in net tuition. Net prices for professional programs such as law and medicine are far higher, with a median close to $29,000. At public universities, the net tuition figures are based on prices for state resident students. They include tuition and required fees but not living expenses. As individuals must pay for food and lodging regardless of whether they attend graduate school, these expenses do not represent an additional cost associated with pursuing a higher degree and thus should not factor into the ROI calculation.

However, the costs of graduate school do include the earnings that students give up while enrolled. Only a minority of students who enroll in graduate school full-time also work full-time. Even for those who earn income while pursuing their graduate degrees, studying has a time cost. The ROI calculation therefore assumes that students forego income equivalent to what they could have earned in the labor market during the years they attend graduate school. For instance, the typical student enrolled in graduate school at age 27 gives up $48,000 of income during that year (though this varies by program).

But it is not enough to merely compare earnings to tuition and opportunity cost. Calculating the true value of graduate school also requires estimating a counterfactual: that is, determining what graduate students would have earned in a parallel universe where they did not pursue a graduate degree, and instead went through their careers with only a bachelor’s degree.

This counterfactual earnings profile will not be the same for all graduate programs. Different programs enroll different students with different earnings potential. A master’s degree in engineering, for instance, mostly attracts students with an undergraduate degree in engineering. Since engineers earn high salaries, even if they only have a bachelor’s degree, counterfactual earnings for an engineering master’s are much higher than counterfactual earnings for Master of Fine Arts.

Counterfactual earnings depend on many factors. Graduate students at a university in New York City have higher counterfactual earnings than students at a university in rural Mississippi, because wages in New York are generally higher. The counterfactual also depends on student demographics and cognitive ability. Perhaps the most important factor is the composition of undergraduate majors among students who enroll in each graduate program.

Unfortunately, the science of the day does not allow us to peek into parallel universes and observe the counterfactual for each student. However, we can estimate counterfactual earnings profiles based on the observable characteristics of students and universities. The full details of this estimation procedure are available in the methodology article.

The following chart compares median earnings at age 45 to our estimates of counterfactual earnings at the same age, for each of 435 graduate degree categories. While there is considerable variation in estimated earnings, there is also substantial variation in the counterfactual. Importantly, not all graduate degrees appear to increase their students’ earnings.

 

About 27 percent of individual master’s degrees — along with 5 percent of advanced degrees — have higher counterfactual earnings at age 45. Even before subtracting the costs of graduate school, students in these programs are typically worse off for having enrolled. Depending on the field, pursuing a master’s degree can interrupt the trajectory of an individual’s career, placing her on a lower earnings path than she was before. Many students would have been better off financially if they had simply kept working.

The counterfactual also explains why some degrees that boast high earnings won’t necessarily yield high ROI. High earnings are not as valuable if the counterfactual is also high. The MBA is a prime example of this phenomenon. The nation’s most popular master’s degree boasts median earnings of $88,000 by the time its graduates are 45. This sounds impressive — it’s well above the median for all master’s degrees — until we consider that counterfactual earnings for MBA graduates at the same age are $83,000.

MBA programs often draw from high-earning undergraduate majors such as business and accounting. This pushes up counterfactual earnings for MBA graduates. As a result, MBA programs have to “work harder” to supply their students with earnings that exceed the opportunity cost. As we shall see, many MBA programs fail to do this.

The opposite of the MBA in many respects is the Master of Social Work (MSW). Often seen as a less valuable degree, people with an MSW reach median earnings of just over $60,000 by age 45. This is well below the median for all master’s degrees. But the counterfactual earnings for an MSW graduate at age 45 are just $47,000. The upshot is that an MSW boosts its median graduate’s earnings by almost 30 percent.

The main reason for the MSW’s low counterfactual earnings is the undergraduate majors it draws from. The most common majors for MSW students are social work, psychology, and sociology. These bachelor’s degrees produce relatively meager earnings for their graduates, meaning the earnings bar that MSW programs must clear is much lower. As a result, the MSW ends up as a more reliable earnings-booster than the MBA.

Granted, not all comparisons of earnings to counterfactual earnings are counterintuitive. A master’s degree in engineering offers earnings of $165,000 against a counterfactual of $85,000, meaning this degree is associated with a substantial earnings boost even though counterfactual earnings are already quite high. Master’s degrees such as English literature and fine arts have low counterfactual earnings but even lower observed earnings, meaning these credentials are unlikely to pay off.

With estimates of earnings, counterfactual earnings, tuition costs, and opportunity costs in hand, it is now possible to calculate ROI — the most comprehensive measure of a credential’s financial value — for thousands of graduate degrees across the country.

ROI for 14,000 graduate degrees

ROI is defined as the present discounted value of lifetime earnings with a graduate degree, minus the present discounted value of counterfactual earnings (including earnings while enrolled in graduate school), minus the cost of tuition and fees. I assume that master’s degree students spend one to two years in graduate school, while advanced degree students spend three to five years, depending on the program. Students enjoy the earnings from their graduate degree between the age at which they complete graduate school (which also varies by program) and the age of retirement (assumed to be 65).

Consider a popular program: the master’s in education (M.Ed.) at James Madison University (JMU). The median age of graduation for students with an M.Ed. is 31, based on survey data. I estimate that between ages 32 and 64, a student with a master’s degree in education from JMU will earn roughly $1.06 million in present value terms. Discounted counterfactual earnings between ages 31 and 64 (which includes the one year that the student is enrolled in her M.Ed. program) are roughly $847,000, and tuition for that one year is $8,277. The ROI for this program is equal to estimated earnings minus counterfactual earnings minus tuition costs, or approximately $209,000.

  • Present value of career earnings: $1,064,982
  • Subtract present value of counterfactual career earnings (including earnings while enrolled): $847,244
  • Subtract present value of tuition and required fees: $8,277
  • Return on investment (ROI): $209,461

Master’s degrees: Median ROI $83,000

Weighted by student counts, median ROI across all master’s degree programs is $83,000. In other words, the median master’s degree in the Scorecard is expected to boost its graduates’ lifetime earnings by $83,000, after accounting for tuition, fees, and opportunity cost.

But the overall median is misleading, as ROI varies tremendously by program. Overall, 40 percent of master’s degrees have negative ROI, whereas 20 percent are expected to boost net lifetime income by $500,000 or more. Whether earning a master’s degree is a wise decision depends to great extent on which master’s degree a student pursues.

 

The master’s degrees with the most consistently positive ROI are in computer science, engineering, and nursing. Ninety-seven percent of master’s degrees in these fields offer at least some positive return, and most have an ROI above $500,000. Another degree with consistently positive ROI is the Master of Social Work. Eighty-eight percent of MSW programs have a positive lifetime return. However, this consistently positive return is also consistently small: only 14 percent of MSW programs offer ROI above $250,000.

Positive returns for the MSW may be surprising, but it is important to remember that the counterfactual earnings for this degree are extremely low. The MSW therefore has a lower bar to clear than other degrees in order to produce positive ROI. Other master’s degrees have a much higher bar, and they do not always rise above it.

One degree that frequently fails to pay off for graduates, perhaps surprisingly so, is the MBA. More than 60 percent of MBAs and other business-related master’s degrees do not show a positive return. But there is a minority of programs that buck the trend: 10 percent of business degrees have an ROI above $1 million.

One degree that frequently fails to pay off for graduates, perhaps surprisingly so, is the MBA.

The MBA has a long upper tail of elite programs with lucrative payoffs. Thirteen MBA programs at prestigious schools such as Yale, Penn (Wharton), and Chicago (Booth) offer a lifetime return exceeding $2 million. Perhaps this is to be expected from a degree whose value derives from the networking opportunities available: choice of institution makes an enormous difference to the ROI of an MBA. The handsome returns commonly associated with MBAs are only available at a handful of top schools.

There seems to be a benefit associated with elite institutions. While 8 percent of master’s degrees overall offer a return above $1 million, that share rises to 41 percent among Ivy League and comparable universities. Research universities have slightly better programs than non-research schools: 10 percent of master’s degrees at research universities have ROI above $1 million, versus 5 percent at other institutions.

 

The brand name of an Ivy League school, however, is not enough to guarantee value. Examples of low-quality programs at top universities abound. Columbia University’s master’s program in film — which was the subject of a Wall Street Journal investigation into low-quality graduate programs — reduces net lifetime earnings by nearly $900,000, according to my estimates. The program not only charges high tuition, but also appears to interrupt its students’ careers to the extent that graduates earn lower incomes than they would have otherwise.

By sector, public institutions tend to have the most consistently positive ROI, largely because of their lower tuition. Still, roughly a third of programs at public institutions show a negative return. The share of nonperforming master’s degrees rises to 39 percent at private nonprofit institutions and 64 percent at private for-profit schools. The few for-profit programs with strong ROI are mostly in nursing and health-related fields.

Higher tuition at private universities contributes to their worse performance on ROI metrics. Tuition is almost always higher at the graduate level than the undergraduate. As a result, it plays a larger role in the ROI calculation.

In the lowest tuition quintile, composed of master’s programs that charge net tuition below $7,200, 37 percent of programs do not show a positive return. The share of nonperforming programs rises to 50 percent in the fourth tuition quintile, composed of programs that charge tuition between $13,100 and $18,600. Only at the very top does the pattern reverse itself; about a third of programs in the top tuition quintile have negative ROI.

 

These results suggest that shelling out for an expensive institution is worth it only if the school and specific program are very elite. Moreover, even in this top quintile there are nonperforming programs. A top institution cannot reliably deliver positive ROI if the master’s degree is in the wrong field.

The following table shows the top 25 master’s degrees in the United States, ranked by ROI. Topping the list is a master’s degree in biology from the Medical College of Wisconsin, which appears to be an aggregation of several highly specialized graduate degrees in the biomedical sciences.

Most of the other programs are also in biological fields or advanced health care. One of the education programs on the list, at the Lake Erie College of Osteopathic Medicine, is a medical education program. Most of these top master’s degrees require significant prior training, meaning they are unlikely to be a viable option for most college graduates. Still, for those interested in a career in advanced biological or medical sciences, the list may be informative.

 

Advanced degrees: Median ROI $513,000

Most — but not all — advanced degrees pay off. Among the 2,300 doctoral and professional degrees with data in the Scorecard, the median program yields an impressive ROI of $513,000. Just 14 percent of advanced degrees have negative ROI.

Law and medicine offer the most lucrative returns. Almost half of medical degrees (broadly defined, to include medicine, dentistry, pharmacy, and equivalently advanced credentials), yield a payoff of more than $1 million. Other advanced health care degrees, such as doctorates in physical therapy, also have near-universal positive returns. Law school, despite its hefty price tag and three-year commitment, is usually a good bet: 93 percent of law programs have positive returns and 24 percent have an ROI above $1 million.

 

Supply constraints are one potential reason for the high returns associated with professional degrees. Medical schools have notoriously low acceptance rates, and the number of new medical degrees conferred has failed to keep up with population growth. Law degree conferrals have fallen in absolute terms. High ROI associated with these degrees, combined with a paucity of degree conferrals, suggests that there is unmet market demand for people with these skills. This pushes up salaries for doctors and lawyers, but at an economic cost.

However, not all advanced degrees have a guaranteed payoff. PhDs and equivalent doctoral degrees have highly unreliable returns. STEM doctorates tend to have the highest returns in this category, but even so, roughly a third have negative ROI. Education doctorates also have disappointing payoffs, with three in five failing to show a positive return. Typical ROI for non-STEM, non-education PhDs is even lower. PhDs require a long time out of the labor force, and the academic jobs at the other end of the pipeline may not offer high enough salaries to make that extended commitment worth it.

The top 25 advanced degrees by ROI are all in law or dentistry. The most lucrative advanced degree in the country — and the best degree overall — is the advanced dentistry professional program at the University of Colorado-Denver, which offers an ROI of nearly $11 million. The highest-ROI law degree is Columbia University’s, which offers an estimated payoff of $6.4 million.

Predictably, almost all the top law programs are at prestigious schools, suggesting that reputation and networking opportunities are a main factor in the returns to law school. By contrast, the best dentistry programs are mostly at respected but less-prestigious public universities, meaning learned skills may play a bigger role in the financial returns on these credentials.

 

A word of caution is in order regarding the estimates for advanced degrees, especially those in medicine. After finishing medical school, most new doctors must complete residencies, which can last up to seven years. Low pay during these residencies means that Scorecard earnings are an unreliable guide to career earnings for medical school graduates; this is why my analysis uses ACS data to extrapolate earnings for graduates throughout their lifetimes. However, the weakness of the relationship between early-career and mid-career earnings for medical school graduates makes the extrapolation process less precise. While the average ROI for medical degrees is probably reasonably accurate, readers should use caution in interpreting estimates for individual programs.

Another caveat worth bearing in mind: the ROI estimates reported here apply to the median graduate of each program. By definition, not everyone is at the median. Some graduates of programs that show a negative ROI overall may still receive a positive return individually, and vice versa. Outcomes for the median graduate are still the best way to analyze the overall worth of a graduate degree, but exceptions often occur.

The value of lifetime learning

Some students begin their undergraduate education with plans to eventually get a master’s or advanced degree. One common degree combination is an undergraduate degree in biology and a professional degree in medicine. As an undergraduate major, biology has mediocre returns: 31 percent of bachelor’s degrees in biology have negative ROI, according to our estimates of the ROI of bachelor’s degrees. A student who earns a bachelor’s degree in biology and doesn’t continue her education is likely to see disappointing ROI.

But an undergraduate degree in biology has additional value as preparation for medical school, which is far more lucrative. As we know, almost half of medical degrees have ROI of $1 million or more. Therefore, it is valuable to examine the combined ROI of common pairings of bachelor’s and graduate degrees.

The following table lists the 20 most common pairings of bachelor’s and graduate degrees. Students who combine a bachelor’s degree in biology and a professional degree in medicine account for 2.2 percent of all graduate degrees issued. The combined ROI for this lifetime learning pathway is $904,000. A bachelor’s degree in biology can reliably offer a substantial return — but only if students use it as a first step towards an advanced degree.

 

Biology-medicine isn’t the only lifetime learning pathway that leads to high returns. Three undergraduate degrees with mediocre ROI on their own — political science, history, and English literature — can lead to lifetime ROI of more than $700,000 when combined with a law degree.

Another popular pathway is a bachelor’s degree in business plus an MBA. This pathway offers lifetime returns of $413,000. However, given that the MBA on its own has typically negative returns, the bachelor’s degree appears to be doing most of the heavy lifting. Not all lifetime learning pathways are financially valuable: students who combine a bachelor’s and a master’s degree in English literature usually come out behind.

The risks and hidden costs of graduate school

All the above figures assume that students finish their graduate degrees on time. But that’s far from true. Non-completion rates at the graduate level are not quite as high as they are at the undergraduate level, but dropout remains a real concern. Failing to finish graduate school leaves students on the hook for many of the costs of school — including tuition and foregone earnings — but they realize few or no material benefits.

Unfortunately, there is a serious lack of data regarding degree completion rates at the graduate level. Institution-level completion rates are available for undergraduate programs, but not graduate. The only recourse is to use aggregate completion rates by degree level and university sector, based on Department of Education survey data.

When accounting for completion rates, the ROI of the median master’s degree drops from $83,000 to $59,000.

Relying on this survey data means assuming, for the purposes of calculation, that all master’s degree programs at public universities have the same completion rate, as do all master’s degrees at private nonprofit universities, all doctoral degrees at public universities, and so on. Obviously, this assumption is unrealistic. The assumption will lead to underestimates of ROI for programs with above-average completion rates, and overestimates of ROI for programs with below-average completion. However, in the aggregate, these errors should cancel out. This means the estimates of completion-adjusted ROI for the median program should be reasonably accurate.

Fortunately, completion rates for graduate degrees are relatively high. The average completion rate for master’s degrees is 80 percent. Estimated completion rates for doctoral and professional degrees are 64 percent and 88 percent, respectively.

When accounting for completion rates, the ROI of the median master’s degree drops from $83,000 to $59,000. This lower figure may be thought of as the expected value of the median master’s degree when a student begins graduate school; it accounts for both the chance of a financial payoff if the student finishes, as well as the risk of noncompletion.

The completion adjustment increases the share of master’s degrees with negative ROI from 40 percent to 41 percent. Most master’s degrees that were financially worthwhile before the completion adjustment are still worth it, thanks to the relatively high completion rates for master’s degrees and their relatively short duration (1–2 years), which limits the financial costs of dropout.

 

The ROI of the median advanced degree drops from $513,000 to $391,000 after accounting for completion rates. The share of nonperforming programs rises from 14 percent to 16 percent, and the share of advanced degrees yielding ROI greater than $1 million drops from 31 percent to 23 percent. For professional degrees, high completion rates buoy their expected value even after adjusting for the risk of dropout. The drop in ROI for doctoral degrees, which have lower completion rates, is more precipitous.

 

Most graduate students do not bear the full cost of their education. Public universities receive direct appropriations from state governments, which enable them to charge tuition lower than the full cost of educating their students. Even some private nonprofit schools provide their graduate students with a subsidy, financed by donations and tax-exempt endowments. Only graduate students at for-profit schools do not receive a net subsidy from their institutions.

Universities generally provide graduate students with a smaller subsidy than undergraduates. Nevertheless, in some cases this subsidy can make a difference. Some positive-ROI programs might fail to show a return if ROI were calculated against the full cost of educating a student, rather than net tuition alone. While prospective graduate students should care most about ROI with respect to net tuition, other stakeholders — including policymakers, trustees, and college administrators — may be interested in ROI with respect to the full underlying cost of graduate school.

Adjusting ROI to account for underlying costs is straightforward. Essentially this means swapping tuition for education-related spending per full-time equivalent student in the ROI calculation. I define education-related spending as spending on instruction, administration, student services, and academic support functions such as libraries. I exclude spending on research and auxiliary enterprises such as dormitories and dining halls, as well as independent operations such as hospitals.

Adjusting for both completion rates and underlying costs reduces ROI for the median master’s degree program from $83,000 to $43,000. The share of master’s degrees which fail to show a positive return rises from 40 percent to 43 percent.

 

At the advanced degree level, adjusting for completion and underlying costs reduces median ROI from $513,000 to $368,000. The share of advanced degrees with negative ROI rises from 14 percent to 21 percent . The rise in the share of negative programs is especially pronounced among doctoral degrees. The share of STEM doctoral programs with negative ROI jumps from 32 percent to 51 percent, while the share of nonperforming educational doctorates rises from 60 percent to 84 percent. However, most law and medical degrees survive the adjustments.

 

The completion and spending adjustments make a major difference at the undergraduate level. Undergraduate students receive large subsidies and have relatively low completion rates. But graduate students receive smaller subsidies and finish their programs at higher rates, so the adjustments do not flip as many programs from positive to negative ROI. Most negative-ROI graduate degrees fail to show a return because they lack added labor market value, not because completion rates are too low or underlying spending is too high.

You can look up the ROI of your graduate degree in any of the three specifications — unadjusted, adjusted for completion, and adjusted for completion and spending — on the table below.

 

Is grad school worth it? Only sometimes

Most students who attend graduate school say they’re pursuing another degree to advance their careers. But despite the fact that financial value is their primary concern, a stunning share of graduate degrees do not yield a positive return. Two in five master’s degrees show negative ROI, along with 14 percent of doctoral and professional degrees. Some graduate degrees pay off, but strong financial returns are far from universal.

The estimates of graduate school ROI presented in this report can help students decide whether pursuing a graduate degree is right for them. For many career fields, a master’s degree can be helpful. But for others, it is a distraction at best and a career impediment at worst. While students often assume that more education always translates into higher earnings, that relationship breaks down at the graduate level.

The ROI estimates for all 14,000 graduate degrees are available for download here. The results also offer some broad takeaways for students and other higher education stakeholders:

The value of a master’s degree depends on field of study. Master’s degrees aren’t always a good investment. Some fields, such as computer science, engineering, and nursing, usually boost their graduates’ earnings enough to justify the cost. But other master’s degrees, especially in the arts and humanities, are almost never worth the costs. These credentials may even reduce lifetime earnings.

Sometimes, earnings directly after graduation aren’t a good predictor of the full financial value of the degree. This is because some degrees, especially the MBA, attract students who would have earned high salaries in the absence of the graduate degree. High earnings for MBA graduates therefore do not translate into high ROI, because MBA programs are not responsible for most of their graduates’ financial success. Students should consider their existing earnings potential when deciding whether to pursue graduate school. Often, they would earn just as much without an additional degree.

Many master’s degrees are not good investments. Around 40 percent of master’s degree programs do not show a positive return; this proportion rises to 43 percent when adjusting for non-completion and underlying costs. The high share of nonperforming programs is deeply concerning given the rapid growth in master’s degree conferrals over the past two decades. In the wake of the COVID-19 pandemic, master’s programs have seen the fastest growth of any postsecondary credential, undergraduate or graduate.

It is unclear whether America’s massive master’s degree apparatus — over 820,000 degrees are conferred every year — is really serving the needs of students and society. The high number of master’s degrees that do not pay off may put additional stress on America’s federal student loan program, which is growing in volume largely thanks to graduate degrees, and lead to additional calls from borrowers for loan relief. Those demands will continue so long as the federal government maintains its policy of unrestricted lending for graduate education.

Advanced degrees pay off — but their growth is stagnant. Professional degrees in law, medicine, dentistry, and comparable fields can be lucrative, with returns frequently in excess of $1 million. The high ROI associated with these credentials suggests there is substantial labor market demand for trained professionals in the legal and medical fields. Yet, unlike master’s degrees, degree conferrals in many professional fields have grown slowly or even dropped.

High ROI and low growth in these fields suggest the presence of supply constraints. This may signal a need for accreditors to authorize new law and medical schools. Policymakers might also consider allowing aspiring doctors and lawyers to skip some of their undergraduate education, in order to reduce the total time spent in school. Stepping-stone majors on the path toward professional school, such as biology and history, have a relatively low value on their own. This suggests students’ time is better spent on the professional training that is their end goal.

I hope the ROI estimates provided in this report will assist young people as they make decisions about whether to pursue graduate education. Not all graduate degrees are equally valuable, and some are even counterproductive. The answer to the question “is graduate school worth it?” is a resounding sometimes.