Are you one of those poor schmucks who borrowed a lot of money to get a college degree that didn't pay off?
Perhaps you attended the New England Conservatory of Music, where only 57 percent of students earned more than a high school graduate six years after enrolling. Or maybe you attended Grambling State University, an HBCU in North Louisiana, where only 43 percent of students earned more than a high school graduate six years after they enrolled.
How will you pay off those student loans if your college degree didn't increase your income?
Perhaps you think that a master's degree from a posh private school will get you out of the financial hole you dug for yourself when you took out student loans to earn a bachelor's degree.
So you apply to one of those private universities and are surprised and flattered when you get an admission letter. Will a master's degree from a private college get you into a higher income bracket?
Maybe. Maybe not.
Jason Delisle and Jason Cohn, researchers at the Urban Institute, published a report last month that examined master's programs where students acquired high debt levels but made low salaries. The schools with the highest debt-to-earnings (DTE) ratio had average student-loan debt of $77,000 and an average income of only $43,000 two years after graduating.
Delisle and Cohn found that private nonprofit colleges are most likely to have high-debt-to-earning ratios. Here is what they reported:
Programs in the high-DTE group are heavily concentrated at private nonprofit universities. Although these institutions offer 44 percent of all master's degree programs, they account for 75 percent of high-DTE programs.
Delisle and Cohn also found that master's degree programs in the high DTE category were often in the social-sciences field:
By looking at specific program types, we see that three types of master's degrees account for a large share of borrowers in the high-DTE category: social work (17 percent); clinical, counseling, and applied psychology degrees (15 percent); and mental and social services (12 percent).
The Urban Institute's research did not focus on MBA degrees or graduate degrees in fields outside the social sciences. Nevertheless, other soft-sciences master's programs are also too expensive based on the salaries of their graduates.
A one-year master's degree in journalism at Columbia University cost an average of $147,000 five years ago when the starting salary for journalists was only $40,000. And as the Wall Street Journal reported last year, a graduate degree from Columbia in film costs an average of $181,000, and graduates had average salaries of $30,000 two years after graduating.
So, here are three takeaways:
First, as Jason Delise and Jason Cohn pointed out, graduate degrees in social sciences are much cheaper at public institutions. If you are thinking about getting a master's degree in social work or counseling, you will get better value if you attend your state university rather than a private college.
Second, private colleges have promoted graduate-degree programs to generate revenue. Under the Grad PLUS program, graduate students can take out federal loans to finance their studies up to the cost of attendance--no matter how expensive a program is. Thus, we can thank the federal government's Grad PLUS program for the inflated price of graduate studies and the mindless proliferation of graduate programs.
Finally, many master's degree programs are simply not worth the cost, and this is true not only for the social sciences but MBA programs and graduate degrees in education.
The bottom line is this: If you are already burdened by student loans to get your bachelor's degree, you could wind up deeper in debt by obtaining a master's degree from a private college without getting a job that pays enough to service your student debt.
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