If you are considering graduate school, the payoff may depend less on ambition and more on the field you choose. A recent study from the Postsecondary Education & Economics Research Center at American University, building on research by the Yale Tobin Center for Economic Policy explains that some degrees significantly boost earnings, others may not justify their cost.
Returns differ widely by discipline
The research paper by Joseph Altonji and Zhengren Zhu shows that just how uneven outcomes can be. Professional degrees in medicine, law and pharmacy deliver the strongest gains. Medical graduates, for example, see their earnings jump sharply after completing their degree, making it one of the highest-return investments among all fields studied.
Strong salaries, but smaller boosts in technical fields
Fields like engineering, business and other technical areas still lead to high salaries, but the incremental benefit of a graduate degree is more modest. Since many candidates in these areas already start with relatively strong undergraduate earnings, the additional boost from a master’s or similar qualification tends to be limited.
Some degrees may not recover their cost
The study finds that degrees in education, psychology and related social sciences often struggle to generate meaningful financial returns. In some cases, especially after factoring in tuition and time spent out of the workforce, graduates may not fully recover their investment.
“A graduate degree can benefit you financially in some circumstances, but it is a very risky proposition,” Preston Cooper, a senior fellow at the American Enterprise Institute, told The Washington Post. “You want to make sure you are working with all the information.”
What the study looked at
The conclusions are based on data from around 800,000 students who attended Texas public universities over a 30-year period. Instead of just looking at salaries after graduation, the researchers compared earnings before and after graduate school, while also accounting for costs and expected income growth without further study.
“The message is that we need to provide better information to students,” Joseph Altonji told The Washington Post, when referring to sussing out which grad programs are worth the time and cost.
The authors caution that headline salary figures can be misleading. According to Zhengren Zhu, students should look at how much graduates were earning before enrolling, not just after.
“At the very least, you should compare what they earned before grad school and what they earned after,” Zhu, who is an assistant professor of economics at Vassar College, told The Washington Post.
The study also notes that graduate education tends to offer relatively greater gains for women, full-time students and those who started out with lower-paying undergraduate degrees.