Is Graduate School Worth It? Evaluating the Return on Investment in a Master's Degree

Pursuing a college degree is one of the most expensive financial investments that an individual makes during their lifetime. While several factors contribute to the increasing cost of obtaining a bachelor’s degree, research indicates that the wage premium of a college degree remains highly beneficial. Over a lifetime, a bachelor’s degree has an estimated worth of $2.8 million with a wage premium that is 84% greater than individuals holding just a high school diploma. The tremendous monetary returns and economic opportunities that are associated with a bachelor’s degree lead to the question as to whether an advanced degree is necessary or worth the additional financial burden. Master’s degree tuition, opportunity costs of a foregone salary, and the current $1.4 trillion in outstanding student loan debt, are all factors that must be considered when evaluating the value of graduate school. While a great deal of research has been conducted to accurately measure the positive net gains to a bachelor’s degree, less investigation has been performed for master’s degrees. This study utilizes data from the 2016-2017 PayScale College Salary Report, the Federal Student Aid Data Center, and U.S. News Higher Education, to analyze the return on investment of pursuing a master’s degree. The study assesses median costs and earnings at the school level for master’s degrees in three different academic focuses: Business, Law, and STEM. Results from the study reveal substantial positive net returns for a master’s degree at a remarkably high percentage of business and law schools. However, the financial gains to a master’s degree in STEM concentrations exhibited negative returns compared to a bachelor’s degree for the majority of the institutions observed.