Dive Brief:

• While graduate degrees yield higher incomes overall, ever-rising costs and higher debt loads make postgraduate education a “risky” bet for students, according to a study released Wednesday by Georgetown University’s Center on Education and the Workforce. 
• The report found that graduate degree costs for students tripled from 2000 to 2020 while the median debt principal for student borrowers rose by more than 47% to $50,000. 
• At the same time, job prospects are uneven for degree earners. To protect prospective students, the report authors propose tying institutional eligibility for federal graduate school loans to tests for earnings premiums and debt-to-earnings ratios.

Dive Insight:

Graduate degrees, including master’s, doctorate and professional credentials, still provide students a competitive edge. As the CEW study notes, they “offer the highest earnings prospects and best chances of finding employment of all educational credentials.”

Researchers also noted that the earnings premium on graduate degrees relative to that of bachelor’s degrees has been a constant over three decades — but it is shrinking as student spending and debt increase with graduate program costs. 

As for those costs: Between 2000 and 2020, median annual tuition and fees for graduate programs rose from $3,000 to $10,000, a growth rate of 233%, CEW researchers found.

“High debt is not necessarily a problem, provided that borrowers earn enough to repay their debt," the report said. "However, a substantial number of programs leave graduates with levels of debt that they cannot reasonably repay.”

For colleges, graduate degree programs have provided a source of revenue — those growing costs for students are all going somewhere, after all. 

A 2022 study from the consultancy EAB found that nearly all surveyed college leaders said that increasing graduate and adult enrollment was a priority at their institutions. And 56% of participants reported increasing the number of programs offered in adult and graduate education since spring 2020.

To pay for graduate degrees, students can borrow through two federal loan programs. The CEW study found the unsubsidized Grad PLUS loan program oversees a smaller share of disbursements to graduate students compared to the Direct Unsubsidized Stafford loans — 32% versus 68% respectively. But the Grad PLUS loans present a problem given that they are only limited by program costs. 

“Due to the high levels of borrowing permitted under Grad PLUS, institutions have limited incentive to keep costs in line with expected earnings,” the CEW report argued. 

Historically marginalized students are most at risk, CEW found. For example, Black and African American students are “especially overrepresented” in the Grad PLUS program, representing 16% of its borrowers, compared to 12% of graduate students overall. 

And median earnings for those from historically marginalized groups with graduate degrees are at least $10,000 less than those of White adults with the same education levels. 

Taking a cue from the Education Department’s gainful employment and financial value transparency regulations, CEW researchers proposed tying colleges' access to federal loans to program graduates' measures of increased earnings capacity as well as debt-to-earnings ratios. Under the proposal, if a program failed either test two or three years in a row, it wouldn’t be eligible for Grad PLUS loans. 

“Taken together, these regulations would introduce some cost discipline to institutions and provide transparency on program performance to students,” researchers wrote.