More American workers than ever are holding a graduate degree. Years of increasing professional demands and headlines declaring a master’s degree to be “the new bachelor’s degree” have driven record numbers of students into graduate school.
And yet, more and more high-paying jobs no longer require a college degree at all. In this tight job market, do college graduates need a master’s degree to compete? Maybe not.
“We’ve all reduced our near-obsession with mastery,” says Johnny C. Taylor Jr., CEO and president of the Society for Human Resource Management.
Anecdotal and statistical evidence shows that employers were already reducing credential requirements even before the pandemic: Data from a labor market analysis by the Burning Glass Institute shows a reduction in medium and high skill requirements – jobs that require more education than a high school diploma — from 2017 to 2019.
If fewer employers require graduate degrees to get good jobs, prospective students should assess whether graduate degrees are worth the debt.
SOME FIELDS STILL REQUIRE HIGHER DEGREES
Higher degrees are still the key to entering certain professions: medicine, law and teaching come to mind. In other fields, as long as you can convey that you have the skills an employer is looking for, you can get a job without an advanced degree, says Brad Hershbein, senior economist and deputy director of research at the WE Upjohn Institute for job search in Kalamazoo, Michigan.
ADVANCED DEGREES COULD GUARANTEE AGAINST A RECESSION
Employers are likely reducing education requirements to fill positions, which can be difficult in a tight job market like this, experts say. But that doesn’t mean it will last.
“No one can really explain what we’re going through right now; I think everyone thinks it’s temporary,” says Gordon Lafer, a professor at the University of Oregon Labor Education & Research Center.
Having a graduate degree could provide a guarantee for the future. If the economic tide turns, Taylor says, the degree becomes a differentiator.
Higher degrees tend to be correlated with lower unemployment rates compared to bachelor’s or associate’s degrees. But generally, any degree acts as a buffer against unemployment.
During the Great Recession, those with a bachelor’s degree or higher were more likely to keep their jobs, according to a 2014 study by the Georgetown University Center on Education and the Workforce. So did maintaining employment during the early days of the pandemic, according to June 2020 data from the Federal Reserve Bank of San Francisco.
GRADUATE PROGRAMS ARE NOT ALWAYS PAID
What consumers need is data that shows program-specific outcomes like graduate employment rates and average salaries. These are terribly hard to find. For example, the College Scorecard, a data tool from the U.S. Department of Education, which provides outcome information such as graduation rates and graduate salaries, does not include graduate data by major.
The lack of transparency makes it more difficult for prospective students to make an informed decision. And that could lead some to end up with debts that they are unable to repay.
“Not everyone realizes that there’s a risk that it’s a bad financial investment,” Hershbein says.
Graduate loan debt is at an all-time high, according to data from the federal government and think tanks like the Center for American Progress and Brookings. Unlike undergraduate loans, which have stricter limits on the amount of debt students can take on each year, federal Grad PLUS loans and private graduate loans allow students to borrow up to the cost of frequentation, so it is easier to get into debt.
Your earnings after earning a graduate degree will largely depend on your field and your employer. Results in some areas are easier to predict than in others, Hershbein says.
“Teachers’ master’s degrees are carefully calibrated; based on union contracts, they know what the salary will be,” says Hershbein. But the results of the master’s degree in fields like public policy or fine arts are rather unknown, he adds.
MASTERS PROGRAMS ARE NOT ALL EQUAL
Where you graduate also matters. “If you get an online master’s degree from the University of Phoenix, it will pay less than a master’s degree from the University of Pennsylvania,” Hershbein says.
Taylor says the nature of remote learning during the pandemic has erased some of the bias around online programs, but employer preference is still skewed toward elite college degrees.
“I think we have to be honest with ourselves: there’s always an elitism that plays out in the hiring process,” Taylor says.
For graduate students, attending a highly selective university could help them build professional connections to more easily get a job. And graduate programs are “cash cows” for universities, Hershbein says. Universities rely on the prestige of their undergraduate degrees to attract graduate students to expensive programs.
Students then accumulate exorbitant debts for degrees that may not pay off.
An estimated 40% of master’s programs earn nothing at all, according to February 2022 data from the Foundation for Equal Opportunity Research, a nonprofit think tank.
The uncertainty means prospective students will have to take steps to prevent higher education from hurting their finances more than it helps their job prospects. This means that graduate candidates must:
— Start with the costs of the graduate program on a school’s website.
– Research entry-level earnings and educational requirements for occupations using the Bureau of Labor Statistics’ Occupational Outlook Handbook.
– Browse other tools that list program types and outcomes by degree level, including the Wall Street Journal and the Georgetown Center on Education and the Workforce.