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The return on investment is not even across the board
Graduate school can pay off but the “earnings differ widely across fields,” according to a report by the Postsecondary Education and Economics Research Center.
The think tank, affiliated with American University, reviewed data on 121 advanced degrees in Texas and found returns as high as 110 percent for medical school but as low as four percent for education and counseling programs.
The authors also found law school has a 59 percent return on investment while a master’s of business administration has an average return of 16 percent.
The report’s central argument is that graduate school cannot be reduced to a single investment with a single payoff. The authors, Zhengren Zhu and Joseph Altonji, show that headline earnings increases can be misleading because they do not include tuition, time out of the workforce, or the wages students give up while enrolled.
Once these costs are factored in, the returns drop in many cases, especially for long and expensive programs such as JD and PharmD degrees. The study also emphasizes that program quality matters, particularly for law and business, where higher‑ranked programs tend to generate stronger outcomes than lower‑ranked ones.
Zhu, a professor at Vassar College, told The College Fix there are other factors students should consider.
“When deciding whether to enroll, students should look beyond average post‑graduation earnings and ask recruiters and administrators what graduates earned before entering the program,” Zhu (pictured, left) said via email.
Students should also keep in mind that those who majored in lower‑earning fields in college tend to benefit more from graduate degrees, that women generally see larger gains, and that program ranking is especially important for JD and MBA programs. Additionally, Zhu said that he and Altonji, a Yale university economist (pictured, right), always caveat their findings with the note that money is not everything.
Zhu suggests that it is unclear whether debt forgiveness or other financial aid structures are the right policy for this problem, and raises the alternative that healthcare and social welfare systems might more sensibly compensate these high‑social‑value professions. He also notes that this issue lies beyond the scope of the research and should be treated as an open‑ended question.
“It is very much likely that some of the low‑personal‑return programs, such as social work and clinical psychology, are high‑social‑return programs,” Zhu told The Fix. “The honest answer is that current research does not have a good answer or estimate for that.”
Beth Akers, a senior fellow at the American Enterprise Institute, agrees that students need clearer information before making such high‑stakes decisions.
“Students should be given more information up front so they can decide whether they really want to enroll in a low‑return program,” she told The Fix. “Some do and many don’t.”
She points out that most students entering college are primarily seeking better earning opportunities, which “highlight[s]the variation in opportunity across majors and institutions might push students away from low‑return occupations that are sometimes jobs that contribute to the public good.”
To address any resulting labor shortages in those fields, Akers proposes tying support more directly to the work itself.
Akers supports income‑driven repayment as a way to protect students from unexpectedly poor outcomes after college, but she argues it should not be used as a tool to subsidize jobs that provide social benefit while paying low wages.
She went on to argue that better information alone will not fix the problem without a shift in how students approach college.
“I’d love to see better data on student outcomes,” she said. “But the reality is that we need a change in the culture of decision making.”
She said students are not “shopping for college by looking at the data” and potential returns.
“It seems they are trusting in the old messaging that suggested more education is better.”
