One of the nice things about writing for the Brookings Brown Center Chalkboard is receiving the occasional thought-provoking question from an astute reader. After writing in December about college affordability, I heard from a university president with an excellent question: “What about graduate school?” Much less has been said about the returns to graduate school as compared to getting a bachelor’s degree. In fact, the data on the costs and outcomes associated with graduate degrees is much more limited than that data on bachelor’s degrees—in what follows we’ll have to piece together bits and pieces.
The short answer is that, on average, getting a graduate degree pays very nicely. The earnings difference between college and graduate school is not as large as the premium for going from a high school diploma to a college degree, but it is quite substantial.
How many adults hold a graduate degree?
Let’s begin by asking whether enough people actually get graduate degrees for the question to be interesting.
The answer is yes, many people obtain graduate degrees. The exact answer, however, depends on the data source and on exactly how the question is posed. For example, Figure 1 below illustrates American Community Survey (ACS) data for people ages 30 to 65.
About 17% of adults have a graduate degree or, looking at it another way, about 40% of adults who earned a college degree went on to complete a graduate degree after their bachelor’s—so, again, many graduate degrees. Understanding the economics of the various types of graduate degrees is important. The ACS breaks out graduate degrees into master’s, doctorates (Ph.D., Ed.D., etc.), and professional degrees (M.D., J.D., etc.) As Figure 1 shows, the vast majority of graduate degrees are master’s degrees.
The figure above looks at the existing population. Another way to ask the question is to look at the degrees conferred in a particular year. In the most recent government report, the number of graduate degrees conferred (1,080,000) is about half the number of bachelor’s (2,015,000), a ratio that has risen somewhat over the last couple of decades. While the two sources don’t quite match, both make clear that the number of graduate degrees is substantial.
What are the financial returns to a graduate degree?
Here is the age-earnings profile from the ACS based on highest degree earned. At age 45, a master’s degree adds about $16,000 a year over a bachelor’s degree only—a 23% increase. A doctorate is associated with $21,000 over a bachelor’s, and a professional degree averages $39,000 over a bachelor’s at age 45. (The usual caveats apply here: These are simple descriptive means across different survey subsamples, and differences are not necessarily indicative of causal relationships.) The graduate over bachelor’s premium is generally smaller than the bachelor’s over high school premium ($34,000 at age 45)—but still substantial.
Notably, earnings for all groups drop off considerably after about age 60. That’s because many people start to drop out of work after that age. The drop-off is much less noticeable for those with doctorates. I will speculate here, informed by my personal experience: Getting to do the kind of research and teaching that a doctorate allows leads to a pretty fun gig; many are often in no hurry to retire.
What’s been the path of the graduate wage premium over time? The college wage premium has risen some over recent decades. As the next figure shows, the premium for doctorates and professional degrees also rose and then stayed steady in recent years. The premium for master’s degrees has remained steady for a considerable period.
How do graduate students fund their studies?
It is clear graduate degrees raise earnings, but what do these programs cost? Unfortunately, much less data is collected on graduate programs than is reported for undergraduates. Generally, tuition is not broken out for master’s versus doctorates. Data on financial aid is almost nonexistent. In many cases, doctorate students receive tuition waivers and employment from their universities—that data isn’t collected either. The best that can be done is to piece together bits from here and there. (There is a report from the Urban Institute with very helpful, albeit somewhat dated, information.) Unsurprisingly, many graduate students (about 44%) make up the difference between tuition and aid by taking out student loans. Going forward, new restrictions on federal graduate student loans may change how the gap is financed. The best estimates suggest average private, nonprofit graduate tuition and fees were around $30,000, and public, in-state tuition and feels totaled about $13,000 in 2021. This is slightly higher, but not significantly higher than tuition and fees in 2000—about $24,000 for private institutions and $7,000 for public institutions (adjusted to 2021 dollars).
While there is much less data on graduate financial aid than one might wish, we can put together a recent snapshot from the 2019-2020 National Postsecondary Aid Study. Based on survey data, the study breaks down aid by type of degree and type of aid. Table 1 explains what fraction of students receive what kind of aid and how much aid they receive (note: Students often receive aid of more than one type).
Nearly half of graduate students received grant money. Employer aid is uncommon overall but occurs more frequently among those pursing a master’s. About 40% of doctoral students held graduate assistantships, though these were quite rare for master’s and professional degree students. A graduate assistantship is technically a form of employment, not a gift to the student. However, it often functions as an apprenticeship that provides career training. In that sense, it is more clearly a form of “aid.”
Among students who received one of the three aid categories, the same study illustrates the average amount provided. (For context, the Consumer Price Index has risen about 25% since the survey was conducted.)
Doctoral students receive higher levels of aid than do either master’s or professional students, especially when it comes to the value of an assistantship. Further complicating the picture, assistantships often come with partial or complete tuition remission. The values recorded by the survey for assistantships are too low to include tuition remission. There is no way to tell whether some part of the grant aid includes remission.
Do graduate degrees pass a rough cost-benefit test?
Given the numerous caveats regarding graduate tuition and financial aid, a rough comparison of student costs can be made using available tuition and stipend data. Both differential tuition rates and accounting for tuition remission might matter substantially, and institution-specific data can provide more nuance than nationally representative measures that don’t include details on program-specific costs. Data from the University of California system for the 2024-25 academic year—covering nearly 50,000 students—helps put the issue of tuition remission in sharp relief.
In the table, the first column represents the costs a graduate student owes the university—tuition, fees, and health insurance. In the second column, total support represents the sum total of the following: grants from all sources, earnings from the university, tuition remission, and university remission of health insurance premiums. The net cost (payment) column is the one to pay attention to: These numbers are the difference between the university costs in the first column minus the total support in the second column. Think of the net costs as the actual amount graduate students pay. And here, negative numbers mean students walk away with money in their pockets.
So at the University of California, the average doctoral student gets the cost of schooling fully covered plus enough money to support themselves, albeit not exactly in the lap of luxury. Master’s and professional students get significant aid, but do end up paying a balance to the university. Unsurprisingly, grad students often do end up taking on debt by graduation time to assist in completing their degrees—averaging about $50,000 for doctoral students and academic master’s students and over $100,000 for professional students (among those who take out loans). Dentistry students graduate with well over $200,000 in debt.
As noted earlier in this Chalkboard post, graduate degrees are strongly associated with higher earnings. And the tables and figure above show significant support from universities and other sources of aid. There is one more important piece in understanding how to finance graduate education: Graduate students are older than college students. Since graduate students often maintain employment while studying, the financial burden of degree costs should be evaluated differently than for undergraduate students and their families. Median earnings while in graduate school are $42,000 (based on the ACS data), although there is a great deal of heterogeneity. Sixteen percent of graduate students report no earnings at all in the year before they were interviewed for the ACS; another quarter report earning under $10,000.
Graduate programs are not all the same
Several caveats merit consideration. First, not all graduate programs are equal. One study found that only half of online graduate programs lead to earnings higher than a bachelor’s and that poor financial outcomes are particularly likely in for-profit online programs. Another study found that for a significant number of graduate programs, the extra earnings aren’t enough to keep up with student loan payments.
The second caveat is that these are numbers for people who complete their degree. Just as is true for undergraduates, many students start graduate school but never earn a degree. Approximately one-third of students who begin a program drop out before completion, and there is some evidence that students who stop out have smaller earnings gains than completers.
While the average earnings with graduate degrees is quite good, the averages don’t speak to a very wide range of outcomes across different fields. K-12 teachers who earn a master’s are often guaranteed an immediate pay bump, averaging 11%. On the other hand, a study looking at schools in Ohio found that there is very little financial gain from master’s degrees in the arts and humanities. At the doctoral level, the 2024 Survey of Earned Doctorates tells us the median salary immediately postgraduation (for those with an employment commitment, excluding postdocs) was $156,000 in computer and information sciences. It was $63,000 in the humanities and $60,000 in the visual and performing arts.
The bottom line for the inquiring university president is: (a) There is considerable financial support for the cost of earning a graduate degree, particularly for doctorates; and (b) a graduate degree leads to significantly higher career earnings, on average.
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