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What's a master's degree worth?

Depending on the subject, debt might outweigh benefits.

By Karen Datko Oct 11, 2009 1:14AM

This guest post comes from "vh" at Funny about Money.


Tina, my associate editor on the day job and my moonlight business partner, sent a link to this interesting discussion. The main post itself has several links to relevant, equally interesting posts and conversations.


Given the astonishing burden of student loans that too many young people are saddled with -- my son's roommate's girlfriend, for example, remarked that she will graduate from a top-quality institution with a master's degree in international business and $1,400-a-month student loan payments -- assessing the "value" of graduate education is not a crass or pointless exercise.

It's well and good to love learning for learning's sake and so to feel that the graduate school experience is irrelevant to one's vocational prospects. However, once that graduate school experience ends, you still have to pay for it. You still have to keep a roof over your head, put food on your table, and foot the considerable cost of raising a family. When young people are saddled with five- and six-figure student loan debt, they should reasonably expect the financial investment in graduate education to pay off with jobs that will support them.


That, unfortunately, is too often not the case.


In our current economy, there simply aren't enough decent jobs (or jobs at all) to accommodate the rafts of M.A.s and Ph.D.s that learning factories like the Great Desert University crank out each year. Certain degrees make for more-employable graduates than others, and some degrees, such as the M.B.A., need to come from a top-tier (read "wildly expensive") school even to get the holder hired, to say nothing of commanding an upper-middle-class starting salary. And some degrees, to be blunt about it, are simply fraudulent: they're moneymaking scams perpetrated by administrators solely to extract as much cash as possible from as many suckers as will bite.


For example, GDU has a much-ballyhooed interdisciplinary master's degree that has virtually no entrance requirements and virtually no substance. Students in this program, which the university advertises as something that will help working adults get ahead in their careers, pay a $200-per-credit surcharge, on top of the regular graduate tuition and various extra charges (all GDU students, for example, pay an extra fee to support the athletic program). Because a standard graduate course carries three credits, every single course you take in this program costs you $600 more than any other student on the campus would pay for it.


Students enrolled in the program take a few core courses taught by the program's director and then fill out their card with electives in regular departments. One elective is U.S.-Mexican border history. A student in this exotic interdisciplinary program may sit next to a History Department graduate student who pays a full $600 less to be in that classroom. Because the program is pretty fluffy and leaves one with a master's degree in nothing recognizable by another university or by an employer, its value is highly questionable. IMHO, it's a scam.


That's not to say you shouldn't pursue a master's degree. Or a doctorate, or a J.D., or degrees in nursing, public health, history, English, library science, whatever is your bliss. To the contrary. Graduate education has -- or should have -- real financial value in addition to the intellectual adventure and polish that students rightly expect to gain from it.


After altogether too many years in the ivied halls of academe, I would advise those who are thinking that now is the time to go back to school for a master's degree, a professional degree, or a doctorate to plan very carefully. You need to develop a two-pronged planning scheme:


Intellectual and spiritual planning. The prospective graduate student should ask Why, really, do I want to do this?

  • Do you want to pursue a subject because you're crazy-passionate about it, so much so that you don't care whether you can ever make a living at it? (There's nothing wrong with this, BTW.)
  • Do you feel a graduate degree will make you look smarter to people who matter to you? (You'd be amazed at how many people with Ph.D.s wanted, at heart, to prove to someone that they weren't so stupid after all. This is not a good reason to go to graduate school.)
  • Do you want a graduate degree because you hope it will open the door to an interesting line of work, whose pay doesn't really matter as long as the job doesn't bore the pants off you?
  • Do you want the degree because you think it will open the door to high-paying occupations, whose remuneration very much does matter?
  • Is it that, at the grand old age of 28 or 30, you still don't know what you want to do when you grow up and you'd like to take a couple years in graduate school to figure that out? (Chances are you won't figure it out then, either. Precious few of us ever know what we want to do when we grow up.)

The answers to these and similar questions not only bear on your choice of major, they bear on financial issues, too. To make a just-barely-living wage in teaching, journalism, or library science, for example, may require a master's degree, but it doesn't require one from an expensive university.


As long as you can put food on your table, a vocation that calls to you need not earn a ton of money. But . . . maybe it shouldn't put you in hock for the rest of your life. And surely Tucson, Buffalo, or Austin is as good a place as New Haven to take two years to seek the meaning of your life. On the other hand, if a high-powered corporate career is what you're after, then you probably need a degree from a world-class institution -- a costly program may pay for itself within a few years after you graduate.


Financial planning. Bringing your real motives into sharp focus goes a long way toward deciding how much to spend on a degree and how to finance it. First, of course, you now can decide whether you truly need a degree from a prestigious (i.e., expensive) school or whether an in-state public university will suffice.

  • Consider that even lukewarm public universities often have one or two first-rate-sometimes world-class programs. The University of Arizona, for example, has one of the premier programs in astrophysics on the planet. Psychology programs at Michigan, Cal-Berkeley, Illinois, UCLA, Minnesota, Indiana, and Washington rank among the top 20 in the U.S. Cal-Berkeley, NYU, North Carolina, Indiana, Washington, and Maryland's MBA programs have shown up among the top 20. Don't discount your home state's public schools, especially if you're in a place in your life where one master's degree is about as good as another. Check university rankings for schools in your state and for public universities whose out-of-state tuition is more or less within reason.
  • If nothing close to home has a program that suffices, investigate universities in other countries, such as Canada, where costs are far more reasonable than out-of-state fees in the U.S.
  • Try to get your employer to foot part or all of the bill. Many companies and government employers will underwrite graduate training relevant to the job. Even if you have to agree to stay with the company for a number of years after you finish the degree, that's more than a fair trade to avoid being saddled with student loan debt for years.
  • Look for research assistantships that waive tuition. Tell the program director or whoever is trying to recruit you that you can't attend unless you get an assistantship or other support that will waive tuition. Remember: Graduate students are the bread and butter of most university departments. They want you.
  • Failing that, try to get a 50% FTE job on the campus. Most universities waive tuition for employees, and often this applies to half-time as well as full-time workers. GDU, for example, considers a half-time job to be "full time," complete with health insurance and tuition waiver. The waiver is taxed as income, but since you will earn so little, your tax will be minimal, certainly compared with a lifetime of student loan payments. Often this applies only to in-state tuition; bear that in mind if you're looking at out-of-state schools.
  • Some universities will waive tuition for an employee's spouse. If your husband or wife has a job that's fungible and is willing to work at the desired college or university, this is a strategy that might make sense.
  • If you're interested in a university in another state, get a job in that state, register your car there, register to vote, and wait a year to enroll. This will establish residency and avoid the outrageous tuition often charged to out-of-state students.

Do everything you can to avoid having to take on student loans, even if it means maintaining your dreary day job and taking coursework online and at night. If you possibly can get by on a part-time income, tighten your belt for the two to four years it will take to complete a program while you work. That's a hard row to hoe, but well worth the goal: completing the degree free of debt.


Finally, I'd add one more bit of advice.


Caveat emptor!

Investigate and think carefully about any degree program before enrolling -- no matter which institution offers it. Some otherwise respectable universities have gone into the diploma mill business. Under pressure from legislators and alumni to compete with outfits like the University of Phoenix, university administrators and boards of regents crave to operate their institutions on a business model, even though education is not and should never be a business.


Any degree program that does not require the GRE, the GMAT, the LSE, or a similar entry exam is suspect. My university, for example, offers a very respectable master of business administration, for which applicants must submit GMAT scores. It also offers several knockoff low-residency and online versions of the MBA, none of which requires an entrance exam of any kind. Savvy employers know the difference.


Any fully online degree program should be regarded with deepest suspicion. Any low-residency program should be approached with caution. Any interdisciplinary program that leaves you with a strangely titled degree ("master of liberal studies," for example) should be avoided. These degrees may get you a perfectly fine job. Maybe not, too.


If higher education is a business, then students are consumers, and they should use as much care in buying the "product" as they do in buying a refrigerator or a dishwasher.


Postscript: One other strategy for underwriting a master's degree without going into permanent hock is to join the military. I didn't think about this as I wrote the post, first because it's such a huge commitment and second because IMHO, you should join the military because you want to serve your country, not because you want to extract a lagniappe. If your main motive for signing up is to have the taxpayer cover the cost of your graduate tuition, you really ought to ask yourself whether a master's degree is worth risking your life. There are higher reasons for serving America.


Related reading at Funny about Money:

Published July 20, 2009
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