These Popular Graduate Programs Can Leave Students With Large Debt

Many students enrolling in the most popular graduate programs can expect to shoulder large debt loads compared to their earnings, and that debt-to-income ratio tends to be largest for students attending for-profit institutions compared to public or private, nonprofit schools.

Those are two of the major takeaways from a new report report Think Hard: Your Graduate School’s Sector Matters by Michael Itzkowitz, founder and president of The HEA Group, released today in collaboration with Student Defense.

The report analyzes the five most popular master’s and doctoral programs in the United States and examines the differences in how much graduates earn—and how much they owe—based on the type of school where they pursued their specific course of study.

Master’s Programs

The five most popular master’s degree programs in the U.S. based on enrollments are business administration, educational administration, registered nursing, social work, and teacher education.

Using data from the U.S. Department of Education’s College Scorecard, the authors calculated the weighted average earnings (in 2021 dollars) for students four years after they graduated from these program in 2015-2016. They also collected debt measures for students completing these programs from 2018-2020.

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For four of these five master’s programs (business administration, educational administration, nursing and social work) those offered by public universities leave students with the lowest “debt-to-earnings” ratios, meaning they owed the smallest amount of debt compared to the wages they earned after graduation.

For example, graduates who obtained a master’s in business administration at a public college owed an average of $42,246, but they earned an average of $106,044 four years after graduation. Therefore, their debt is 39.8% of their income. Here are the averages for MBA graduates from other types of institutions:

• MBA graduates from private, nonprofit programs had average earnings of $104,090 with an average debt of $43, 533 (41.8% of their income).
• Graduates from for-profit MBA schools earned an average of $66,283 and had $42,484 in average debt (64.1% of their income).

For most of the other popular Master’s-level programs, graduates from for-profit institutions had more debt and lower wages than their public and private, non-profit counterparts. This pattern was most pronounced for master’s degrees in social work, where graduates from a for-profit program owed nearly twice as much ($72,715), yet still earned less ($53,534) than students completing the same degree program at a public university where graduates borrow $37,566 and earn $56,607, on average.

Doctoral Programs

The most popular doctoral programs in the U.S. are business administration; clinical, counseling or applied psychology; educational administration; registered nursing; and rehabilitation and therapeutic professions.

Although these are the most sought after programs, some are less available in certain sectors. For example, no data were available for “business administration” doctoral degrees at public universities because they are more likely to be offered as specific doctoral degrees in fields such as economics, finance, or marketing.

The pattern with the most popular doctoral degrees was similar to that for the master’s degrees, with those in the for-profit sector leaving students with the highest debt and lowest comparative earnings.

For example, a for-profit doctoral degree in clinical, counseling or applied psychology results in students owing more than twice as much ($175,109) on average as they earn ($87,136) four years after graduating. This leaves them with a 201% debt-to income percentage, compared to 101.3% for graduates of public programs and 178.8% for those completing at a private, nonprofit university.

In fact, average earnings were less than debt owed for each of the popular doctoral programs at for-profit schools except for the very in-demand field of nursing where graduates of for-profit programs had a lower debt-to-earnings percentage (56.6%) than graduates from either public (58.7%) or private, nonprofit (67.9%) schools.

Unfortunately, some popular doctoral degrees offered at public or private institutions also can leave students owing more than their expected annual earnings early in their careers. A doctoral graduate in rehabilitation and therapeutic professions from a public university owes $80,844 on average compared to earnings of $78,797, and graduates of these programs from nonprofit institutions owe an average of $97,409, far exceeding their expected annual earnings of $77,657.

Implications

People pursue graduate degrees for many reasons, but the most popular programs tend to be more closely tied to an occupational entitlement, often in the forms of professional licensure, than advanced degrees in other academic disciplines. That makes a comparison of program costs to early career earnings particularly relevant. As these new data make clear, students should take a “buyer beware” attitude when considering which advanced programs to pursue and, perhaps even more importantly, where to pursue them.

“Right now, graduate schools remain the most unregulated segment of higher education,” Itzkowitz told me. “These programs often serve as the cash cows for institutions across the United States, yet there’s nothing stopping certain schools or certain sectors from leaving students with suboptimal earnings and unmanageable debt. Students and taxpayers deserve better since both make such a hefty investment.’