Are you thinking of going to graduate school? Wait a second.
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A recent study by the Equal Opportunity Research Foundation (FREOPP) reveals a disturbing truth: 40% of master’s degrees do not generate positive returns. In other words, the cost of earning a degree does not outweigh the higher salary you will receive in the future.
So before you waste time (and money) on a precious degree, check out this roundup of the most and least lucrative graduate degrees.
But first, what makes a degree “profitable”?
According to the study, a profitable degree is one where the cost of earning a degree is less than the difference in lifetime earnings between those who have a degree and those who only have a bachelor’s degree.
In other words, you make more money with a degree than without one.
And if you think about it, an advantageous degree is the whole point of going to graduate school. If you’re going to invest thousands of dollars in your education (and give up the income you could earn in the labor market), it will be in the name of higher lifetime earnings.
But what happens when you get that degree and the pay raise never comes? Enter: Degrees with a negative return on investment (ROI).
Least Profitable Master’s Degrees
The sad truth is that 40% of graduate degrees are not worth the cost of tuition. This is because these degrees have a negative return on investment where salary increases never outweigh the cost of tuition.
So what degrees fall into this terrible category? The FREOPP study analyzed over 14,000 graduate degrees and found that these areas of study are the least profitable:
- Arts, Humanities and Theology.
- MBA and other business degrees.
- Psychology and social sciences.
- Health (other than nursing).
- PhD programs in education.
- PhDs in non-STEM fields.
The MBA part can be shocking, so let me explain. The study found that the MBA consistently ranks among the best degrees, not costs money. This is because an MBA is not responsible for much of a person’s high income. In most cases, the MBA attracts people who already earn high salaries or may only have a bachelor’s degree.
Read more: 21 steps to a better paying job
Most Profitable Master’s Degrees
As you can imagine, the most lucrative degrees tend to be STEM, doctoral, and professional. In particular, 86% of graduate degrees such as medicine and law have a positive ROI—much higher than the average of 40%.
But the study also notes that some of these areas, such as law, are experiencing slow or stagnant growth. So while they may have a high ROI, it doesn’t mean there is demand in the market.
Here’s a closer look at the most lucrative master’s degrees in today’s job market:
- Computer science, mathematics and engineering.
- Care.
- Biology and life sciences.
- Professional degrees in law and medicine.
- Social work.
Distribution of the most and least profitable degrees
This table presents the expected value of a master’s degree. It distributes ROI by area of study so you can see the likelihood of a positive or negative return.
As you can see, computer science, mathematics, engineering, and nursing are almost guaranteed to pay off positively. Whereas in areas like the arts, humanities, and theology, it’s almost guaranteed to be negative.
| Master’s type | % degrees with negative ROI | % degrees with positive ROI |
|---|---|---|
| Computer Science, Mathematics and Engineering | 3% | 97% |
| Care | 3% | 97% |
| Social work | 12% | 88% |
| Biology and Life Sciences | 22% | 78% |
| Education | 32% | 68% |
| Psychology and social sciences | 42% | 58% |
| Various | 42% | 58% |
| Health (other than nursing) | 44% | 56% |
| MBA and other business | 62% | 38% |
| Arts, Humanities and Theology | 85% | fifteen% |
Source: Equal Opportunity Research Foundation.
Read more: Don’t have the “right” degree for your dream job (and dream salary)? How to Convince Employers of What You Do
Is going to graduate school financially worth it?
It depends on the degree you are pursuing, the field of study and other factors such as economics. But in general the answer is: maybe not.
Despite what you may have been told, a degree isn’t always the ticket to a bigger paycheck. In 40% of cases it’s just not worth the cost.
There are many reasons to get a degree. But if your only motivation is to make more money, you might want to rethink your decision.
So why do so many people continue to get degrees?
There are several possible explanations. First, people may not be aware of the data. If you’re like me, you’ve been taught all your life that more education = more money. If you accept this as true, you may never question it.
Secondly, you may get a degree for reasons other than money. Maybe you are passionate about theology or humanitarian work. In this case, it’s okay to follow your passions, even if it doesn’t lead to more money.
And third, you may be hoping that the job market will improve by the time you graduate. Life is unpredictable and you never know what skills might be in demand in the next 5-10 years.
How advantageous is a master’s degree compared to a bachelor’s degree?
It is estimated that an average master’s degree increases your lifetime earnings by $83,000. This takes into account tuition fees, fees and opportunity costs. So if your career spans 40 years, you get an extra $2,075 a year.
For reference, the average bachelor’s degree has an ROI of $306,000. This means that it is much more profitable to get a four-year degree than to continue your studies in graduate school.
The FREOPP study notes that this happens for three main reasons:
- Many graduate programs are expensive.
- You have fewer financial aid options for graduate studies.
- When calculating your ROI, you should consider the income you would give up to get into graduate school. This is the income you could start earning right away if you started working with a bachelor’s degree.
Graduate School Alternatives
There are other ways to increase your earnings without shelling out thousands of dollars for a degree. So, if you think graduate school is not for you, here are a few alternatives to consider:
- Find a job in a high-paying industry, preferably one that doesn’t require a degree.
- Negotiate your salary.
- Learn new skills.
- Start your own business.
Read more: 42 high-paying careers, college education not required
Total for master’s degrees
Going to graduate school is a big decision. And it’s not always a good investment. Make sure you carefully weigh the pros and cons before taking on a case. And if you decide not to go to graduate school, that’s fine too. There are many other ways to achieve career goals.
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