Ny Times Article: Pick The Right Masters Degree & The Pay Off Can Be Great!

Not All Degrees Are Equal

Richard Vedder is director of the Center of College Affordability and Productivity and teaches economics at Ohio University.

Given the poor labor market, should new college graduates go on and get a master’s degree? For many students, this is not a bad option. Census Bureau data show us that typically young adults with master’s degrees earn about $8,000 more a year (roughly, 15 percent) than those just having a bachelor’s diploma. The lifetime earnings gains for the second degree should reach into the low six digits. For many, the rate of return on the added college investment therefore should be reasonably high — and it beats unemployment or working in a low-skilled, low-wage retail trade job.

Universities should survey former students for five years after graduation, and give that information to prospective students.

That said, however, that is not true for everyone. Not all degrees are equal — a master’s in anthropology or art probably has less incremental earning power than a M.B.A. or advanced engineering degree. If graduate enrollments soar as more decide to stay in school, the newly minted master’s graduates may find the job market not all that much better in a couple of years than at the present, and end up taking a relatively low paid job — and facing much larger student loan debts than otherwise.

Moreover, the cost of getting a master’s degree varies a lot, depending on the school attended, the availability of financial aid, the length of the master’s program (ranging typically from one to two years), not to mention the “opportunity cost” in terms of employment income lost while in school. Some master’s programs will cost a student only perhaps $10,000, while others (e.g., an expensive two-year M.B.A. program) might run over $100,000.

The decision whether to pursue further education is complicated by the fact that colleges know little about the vocational success of their own students. Ask a typical university, “How much does your average graduate make in their first job, or two years after graduation?” Usually they will not know.

Universities should survey graduates on a fairly frequent basis for at least five years after graduation, gaining helpful information to give to prospective students that allows them to roughly calculate what they might reasonably expect to gain as a return on their college investment. If a private Web site, payscale.com, can gather that sort of information for many schools, why cannot the schools themselves?