Is the Cost of Master’s Degree Worth the Risk?

The gives and takes of attending graduate school

By Megan Gartrell, Staff Writer

Image courtesy of Ashton College

The camera flashes, capturing a smiling graduate clad in a black robe, red sash and square cap. Her arms link through her parents’ arms and all three beam with pride. Four long years have finally paid off with a shiny, glass-framed bachelor’s degree. The long hours in the library, the endless papers and countless cups of coffee have all led to this moment.

But now what?

Many graduates hope to find that dream job waiting directly outside the college exit doors, but reality shows all too often this isn’t the case. The jump from student to professional can be tricky, especially in this current economy. Unlike the baby boomer generation, there is a growing argument that a university or college degree is simply not enough to land a high paying job. University is no longer the golden ticket it once was.

The New York Times recently warned, with the educational race so hot, the master’s is turning into the new bachelor’s. Which in turn, one could argue, makes a bachelor’s today the equivalent of having a high school diploma 20 years ago.

With college costs ever increasing, there has been plenty of talk about whether there’s a bubble in undergraduate education. That education, like housing, will be the next sector in which prices leap above real value.

In a Room for Debate forum published on the New York Times website, Mark Taylor, the chairman of the religion department at Columbia University, weighed in on the discussion of what a master’s degree is worth. “During times of financial stress, people become vulnerable and understandably seek to improve their situation in any way they can. For many, more education seems to be the solution. When the economy goes down, applications to graduate programs go up,” he said.

Riding out the current economy storm by obtaining a master’s degree could be the next logical step for a recent graduate, but how can he or she be sure it will pay off in the long run? Which degrees are worth getting? And which are not?

Not All Degrees Are Created Equal

There is widely held belief among experts: not all degrees are equal. In fields such as business or engineering, a master’s degree can typically boost income by more than enough to justify the cost. But a master’s in anthropology or art will probably have less earning power.

On their website in August, Forbes released a list of the 10 best and worst master’s degrees in terms of long-term opportunities and salary and employment outlook. Topping the list of best degrees were those in physician assistant studies, computer science and electrical engineering. The worst master’s degrees belonged to library and information science, English and music, respectively.

There aren’t any major surprises in the results. Many students pursue literature, art or music because of a passion rather than a pay cheque. But what did stand out was the absence of a business administration master’s degree (MBA) in the top-10 best master’s degree list.

Further research shows even the most trusted of master’s degrees from the past are starting to lose their luster.

Is an MBA All It’s Cracked up to Be?

Business schools have long sold the promise that an MBA will set students up with future success. But as Philip Delves Broughton, the author of What They Teach you at Harvard Business School and a Harvard MBA holder, explains:“More and more students are finding the promise of business schools to be hollow. The return on investment on an MBA has gone the way of Greek public debt. If you have a decent job in your mid- to late- 20s, unless you have the backing of a corporate sponsor, leaving it to get an MBA is a higher risk than ever.”

Employers are starting to ask the question if an MBA is essential or if it produces employees who are simply too overqualified for the current working force, says Broughton.  Some worry an “overeducated” candidate might demand too high of a salary or be dissatisfied with what’s being offered.

“When you look at today’s most evolved business organisms, it is obvious that an MBA is not required for business success. Apple, which recently usurped Microsoft as the world’s largest technology firm (by market capitalization), has hardly any MBAs among its top ranks,” says Broughton.

Student Debt Woes

According to the 2003-2004 National Postsecondary Student Aid Study, another two years of school averages $37,000 in debt. Peter Coy, Bloomberg Businessweek‘s economics editor, says: “In 2010 student debt exceeded credit-card debt for the first time. In 2011, it surpassed auto loans. In March, the Consumer Financial Protection Bureau announced that student debt had passed $1 trillion.”

Those numbers are staggering, and unfortunately the stress of paying back student loans weighs heavy on many graduates. Ten years is considered a reasonable period to repay one’s student loans, but many students take 20 or 25 years under extended repayment plans.

Another panelist on the Room for Debate forum, Liz Weston, a personal finance columnist for MSN money, says: “Student loans typically can’t be erased in bankruptcy court, and student lenders have extraordinary powers to pursue borrowers, up to and including taking a portion of their Social Security retirement checks. I hear from too many readers who have six-figure student loan debts and $40,000 incomes. They can’t save for retirement or buy a home; some can’t even pay the minimums they owe on their debt.”

 

The Business of Schools

And it’s not simply students who are facing the economic crunch. When asked to weigh in on student debt, Taylor says: “Education is big business and, like other big businesses, it is in big trouble. What people outside the education bubble don’t realize and people inside won’t admit is that many colleges and universities are in the same position that major banks and financial institutions are: their assets are plummeting, their liabilities (debts) are growing, most of their costs are fixed and rising, and their income (return on investments, support from government and private donations, etc.) is falling.”

What this means is that colleges and universities must find new sources of income, and invariably that can be found in an increased enrollment of students. These schools want more students to pursue a master’s or doctorate degree because it helps schools financially.

Benefits of Further Education

Despite all the financial drawbacks, it is important to remember the benefits of going to graduate school.

According to the Canadian Association for Graduate Studies, many schools are currently focusing their curriculums around the placement of students in the workforce. Programs are tailored to ensure employment or have been created as a direct response to the demands of specific industries.

Statistics Canada found that master’s graduates earned over $10,000 more than their bachelor’s degree counterparts for all fields of studies.

The employment website The Labour Market, says a master’s degree also helps students stay relevant. It “promotes critical thinking while utilizing resources and research exercises to provide students with the most current information in their field of study.”

The bottom line is that students have to think ahead. Education is an investment, but it is not always about the money, Beth Flye, director of admissions for the University of North Carolina, told Fox Business last year.

“Weighing the pros and cons of your situation can help you make vital decisions on when and how you will pursue your education as well as what your ultimate goals are going to be by getting this degree,” she said.

“Think about and determine where you are in life, what you want to accomplish and what your career endeavors are to make sure that going back to school is the right decision for you.”

Megan Gartrell is a freelance writer/editor living in Victoria, B.C. whose passions include poetry, fiction, music and dance.