Nearly Half of All Masters Degrees Aren't Worth Getting

According to new research, 23 percent of bachelor's degree programs and 43 percent of master's degree programs have a negative ROI.

Is college worth it? Well, it depends on what degree you're getting and where you're getting it, according to a new paper from the Foundation for Research on Equal Opportunity (FREOPP), an economic opportunity think tank.

While more than three-quarters of all bachelor's degrees have a positive return on investment (ROI), according to the paper, master's and associate degrees are much riskier bets—with many costing students in the long run.

The paper, by Senior Fellow Preston Cooper, examined data from over 50,000 degree and certificate programs at thousands of American colleges and universities. Cooper's analysis looked at how much students were earning immediately after graduation, as well as how much they were making 10 years later. The paper also took into account a student's chance of dropping out when calculating a degree program's ROI.

In all, Cooper found that 31 percent of students are enrolled in a program with a negative ROI—meaning that "the earnings benefits of the degree are unlikely to fully compensate students for the cost and risk of pursuing post-secondary education."

However, different kinds of degrees were more likely to have a negative ROI than others. For example, 77 percent of bachelor's degrees and doctoral and professional degrees have a positive ROI. In contrast, just 57 percent of master's and associate degree programs have a positive ROI. 

For bachelor's degrees, fine arts, education, and biology programs had the lowest median ROI, while engineering, computer science, and nursing degrees gave students the highest long-term rewards.

However, where college students were enrolled also mattered when it came to ROI. For example, an English degree from the University of Virginia has a $581,925 positive return on investment—climbing to over $600,000 when only including students who graduated on time. In contrast, students at Virginia Commonwealth University—another public university—who majored in English have a negative $30,000 ROI, with just a $3,624 benefit for those who end up graduating on time.

"When choosing a college and program of study, students should evaluate several key variables that contribute to ROI. The most important is earnings after graduation," Cooper writes. "Besides starting salary, another critical factor is the institution's completion rate. While students' individual ability and motivation affects their likelihood of completion, research shows that college quality also has an impact on completion rates."

Cooper also pointed out just how much federal dollars go toward funding low-value degree programs. He found that 29 percent of the federal funding that went to the programs he studied went to programs with a negative ROI.

"That figure includes $37 billion in Pell Grants, $47 billion in loans to undergraduates, and $39 billion in loans to graduate students," Cooper writes. "Because ROI is negative for these programs, it's unlikely that most of those loan dollars will be repaid." 

This latest paper paints a detailed picture of the kinds of concerns prospective students and their families should take into account when deciding whether to enroll in college. While bachelor's degrees are still a good bet overall, students need to consider what they'll really get out of both the major they want to study and the school they've been accepted into.