(NerdWallet) — More American workers than ever are holding a graduate degree. Years of increasing job 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 areas still require advanced degrees
Higher degrees remain 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 for the WE Upjohn Institute for job search in Kalamazoo, Michigan.
Higher degrees could hedge against a recession
Employers are likely to lower 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 quite explain what we are going through 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 bachelor’s and higher degrees were more likely to keep their jobs, according to a 2014 study from the Georgetown University Center on Education and the Workforce. The same is true for job retention during the early days of the pandemic, according to June 2020 data from the Federal Reserve Bank of San Francisco.
Graduate programs don’t always pay
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 US Department of Education data tool that provides information on outcomes 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 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 how much debt students can take on each year, federal Grad PLUS loans and private graduate loans allow students to borrow up to the cost of attendance. , 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’ masters are carefully calibrated; based on the 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.
Not all master’s programs are created 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 graduate school from hurting their finances more than it helps their job prospects. This means that graduate candidates must:
- Start with the graduate program costs on a school’s website.
- Research entry-level income 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 the wall street journal and the Georgetown Center on Education and Workforce.