A Master's degree may not be financially worthwhile anymore

Discussion in 'Education' started by kazenatsu, Sep 29, 2023.

  1. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    A lot of people are spending an additional 2 years, after 4 years in college, to get a Master's degree, hoping it will help them get a higher paying job.
    But there is mounting evidence that a Master's degree may no longer be worth it (worth the cost, time, and effort, and debt), if one is hoping it will pay off financially.

    A lot of this may have to do with oversaturation of the job market; a Master's degree does not really make an applicant stand out when there are so many other people with Master's degrees trying to get that job.
    And part of this may having something to do with the popping of the so-called Education Bubble. More and more people "invested" in personal education, expecting it would pay off in the future, but now the society as a whole is coming to the realization that it may not have been worth it. It contributed to somewhat of an economic bubble, with an economy fueled by education debt that couldn't last.

    Master's degrees today (after 2020) are as common as 4-year degrees were in the 1960s.

    More than 16 million people in the US -- about 8 percent of the population -- now have a master's, a 43 percent increase since 2002.

    Is a master's degree worth it? For decades the answer was clear, but US government economists are increasingly concerned that students are now borrowing far too much.

    For the first time, the share of money the government is lending to graduate students annually is on track to eclipse that of undergraduates, exceeding $39 billion, or 47% of federal loans. And it's becoming clear that those advanced degrees don't necessarily result in greater earnings, according to the Office of the Chief Economist at US Department of Education.

    "There is generally very little correspondence between the amount students borrow to finance their advanced degrees and their labor market outcomes," economists Tomás Monarrez and Jordan Matsudaira wrote in a recent report. Earnings for those with graduate degrees remained high but stagnant over the last 20 years, "suggesting a potential decline in the net return to graduate credentials."​

    report here: U.S. Department of Education, Trends in Federal Student Loans for Graduate School, Office of the Chief Economist Tomás Monarrez and Jordan Matsudaira, August 2023

    Grad students accounted for 21% of federal borrowers between 2021 and 2022, yet their debt totaled nearly half of the $83 billion issued by the Education Department.

    Their bills tend to mount up because they can borrow up to the entire cost of attendance for school -- which can run $80,000 or more annually including housing and other living expenses -- while federal undergraduate loans are limited to borrowing about $30,000 over four years. Interest on Grad Plus loans also accrues during school, unlike some loans for undergraduates.

    That's led graduate student borrowers to leave school with an average of $57,000 in debt compared to $27,000 for undergraduate borrowers, according to the National Center for Education Statistics, a trade group that surveys graduating students at more than 200 universities. For a doctoral degree in professional practice, such as medical or law school, the average is $176,000.

    The differential between average starting salaries for bachelor’s and master’s degree graduates decreased to 22.5% in 2021 from 31.8% four years prior, according to the National Association of Colleges and Employers, a trade group surveyed graduating students at more than 200 universities.​

    Getting a Master's Degree May Not Pay Off With a Higher Salary, Janet Lorin. Bloomberg, September 29, 2023

    In 1971, 37.2% of Master's degrees were in Education, followed by Business at 11.2% and Engineering at 7.1%.
    By 2012, 25.4% of Master's degrees were in Business, 23.6% in Education, and 11.1% were in Health professions, trailing in third place. 5.5% in Public Administration and only 5.3% in Engineering.

    (source: Master's degrees are as common now as bachelor's degrees were in the '60s, Libby Nelson, Vox, Feb 7, 2015 )
     
    Last edited: Sep 29, 2023
  2. Melb_muser

    Melb_muser Well-Known Member Donor

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    Still, at an individual level better to be more educated ( to a degree).
     
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  3. FreshAir

    FreshAir Well-Known Member Past Donor

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    if one has the money, do it, but it's not a good financial decision
     
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  4. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    But it's increasingly become less worthwhile, and the decision may not be worth it for an increasing number of people, in an increasing number of situations.

    The majority of people are only getting these Master's degrees because they view it as a personal investment and think it will help get them a higher paying job.

    Especially after around 2004, many Americans were feeling pressure to get a Master's degree to be able to have a better chance of getting certain type of jobs, jobs that typically did not require a Master's degree before. When so many of the other applicants trying to get that job have a Master's degree, you need to too.
    Then in the wake of the 2007 Recession, many people who couldn't find a good job decided to go back to school, so the percentage of the population getting Master's degrees continued to increase. Part of it was that people were more desperate and getting a good paying job was becoming more difficult. And there was some sense that it might be a good idea to wait out the recession. But this ended up creating an oversaturation in the job market.
     
    Last edited: Sep 29, 2023
  5. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    For those familiar with history, I think a parallel could be drawn to the economic bubble that affected U.S. farmers in the 1920s to 30s.

    Farmers borrowed money to buy additional acreage and farm machinery to keep up with the increased demand for wheat to feed people at home and abroad, as much of Europe's food production was impacted by the war. American farmers' huge harvests continued into the 1920s, with the price of a bushel of wheat reaching a high of more than $2 in 1919 before a glut of agricultural products caused prices to drop, requiring farmers to produce greater yields just to net the same amount of money. A bushel of corn that generated as much as $1.02 for a farmer in the early 1920s commanded just $0.29 in 1932.​
     
    Last edited: Sep 29, 2023
  6. Jakob

    Jakob Newly Registered

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  7. Bowerbird

    Bowerbird Well-Known Member

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    Many of the higher paying health care jobs require. Masters as a baseline qualification
     

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