Summary
Is graduate school worth it? Graduate degrees—including master’s, professional, and doctoral degrees—can help individuals boost their earnings and improve career advancement opportunities. But they can also be high-risk investments given rising costs, student debt, and the current lack of transparency about program outcomes.
Graduate Degrees: Risky and Unequal Paths to the Top proposes new measures to improve accountability and transparency in graduate education through a regulatory framework for Grad PLUS loan eligibility that includes both an in-field earnings premium test and a debt-to-earnings test. The report also examines median earnings, costs, and debt across different types of graduate degrees in different fields of study, along with equity gaps in graduate degree attainment and earnings outcomes by race/ethnicity and gender.
Federal Graduate Student Loans
Graduate costs have increased by 233 percent since 2000. Prospective borrowers have two federal student loan options to finance their graduate education.
– Direct Unsubsidized Stafford Loans
Stafford loans account for 68 percent of annual federal graduate student loan disbursements and in most cases have an annual limit of $20,500 for graduate students and an aggregate undergraduate and graduate limit of $138,500.
– Grad PLUS Loans
While Grad PLUS loans make up a smaller portion (32 percent) of annual federal graduate student loan disbursements, they are limited only by an institution’s cost of attendance, an amount that universities set with few incentives to rein in costs.
Debt-to-Earnings Test and In-Field Earnings Premium Test
Grad PLUS student loan borrowers are more likely to be enrolled in high-cost programs and more likely to come from marginalized backgrounds. To address these concerns, CEW researchers developed a policy framework, modeled on the Education Department’s Gainful Employment (GE) and Financial Value Transparency (FVT) regulations, that aims specifically to mediate access to the Grad PLUS Loan Program through two tests.
– Debt-to-Earnings Test
For a program to pass the debt-to-earnings test, its graduates’ median federal loan payments would need to be less than 10 percent of their median earnings above the state living wage.
– In-Field Earnings Premium Test
For a program to pass the in-field earnings premium test, its graduates would need median earnings that are at least 5 percent above the median earnings of young workers with a bachelor’s degree in the same broad field of study and state.
Forty-one percent of master’s degree programs and 67 percent of professional degree programs with available data would not pass our proposed debt-to-earnings test.
Source: Georgetown University Center on Education and the Workforce analysis of data from the US Department of Education, College Scorecard, 2023; the US Census Bureau, American Community Survey (ACS), 2009–21 (pooled); and Glasmeier, “Living Wage Calculator,” 2023.
Explore Graduate Programs
Under CEW’s proposed regulatory framework, all programs would be required to notify potential students of their performance on the two tests. If a program failed either test for two out of three consecutive academic years, its students would lose eligibility for Grad PLUS loans. To see how graduate programs perform on our proposed regulatory tests, explore our sortable table of graduate programs, which also includes annual earnings and median debt amounts.
– Annual Earnings
Earnings refer to median yearly earnings four years after graduation among those who received federal loans and grants.
– Median Debt
Median debt levels reflect federal student loans used to pay for graduate studies among program completers.
For best results, please view on desktop.
Conclusion
Additional policy recommendations, beyond increased transparency and accountability for the Grad PLUS loan program, include
- providing targeted grant aid to support graduate education in socially valuable professions;
- requiring graduate programs to report detailed information about admissions, retention, and completion rates;
- developing a specialized regulatory approach for professional healthcare programs; and
- increasing the number of programs with available financial outcomes data.
Resources
Graduate Degrees: Risky and Unequal Paths to the Top examines median earnings, costs, and debt across different types of graduate degrees in different fields of study, along with equity gaps in graduate degree attainment and earnings outcomes by race/ethnicity and gender.
