Of the 18 most popular fields included in the report, return on investment is highest for Pharm.D. graduates, who see an average 114 percent earnings boost.
On average, going to graduate school increases a student’s lifetime earnings by 17 percent. But that return on investment varies significantly depending on what they studied, according to new research published by the Postsecondary Education & Economics Research Center at American University.
Graduate school has become more popular over the past several decades. In 1993, 31 percent of bachelor’s degree holders aged 35 to 39 also had a graduate degree. As of 2022, that share had risen to 41 percent, the report states. Of the 18 most popular fields included in the report, return on investment is highest for Pharm.D. graduates, who see an average 114 percent earnings boost after graduate school. M.D.s and J.D.s also see high returns—110 percent and 59 percent, respectively.
However, those numbers don’t take into account what the student paid to earn the graduate degree or the potential earnings they lost while in school. After factoring in those figures, M..D programs come out on top, offering a whopping 173 percent average lifetime earnings boost for graduates. Pharm.D. programs offer an average net earnings increase of 68 percent, J.D. programs 41 percent and master’s of public administration programs an average 26 percent boost.
Professional degrees in social work, clinical psychology, psychology and curriculum and instruction yield the lowest returns on investment for students, the report shows. Students who graduate with a master’s degree in social work earn an average 7 percent more than they would have without the degree, but after factoring in tuition costs and forgone earnings, the programs yield a negative 2 percent return. In other words, their average lifetime earnings decreased because they went to graduate school. Clinical psychology programs yield a negative 5 percent return, curriculum and instruction programs a negative 2 percent return, and psychology—a popular major among undergraduates—a negative 8 percent return.
But more money isn’t always a graduate student’s goal, said Zhengren Zhu, an assistant professor of economics at Vassar College and co-author of the report.
“As economists, our target is looking at earnings returns, but clearly, for some of these programs, people don’t go to maximize their earnings,” he said. “Earnings are not everything.”
High postgraduate earnings don’t always mean higher returns on investment, Zhu and his co-author, Yale University economics professor Joseph Altonji, wrote in the report. Engineering, for example, offers high postgraduate average earnings but only “moderate” returns on investment—8 percent for computer engineering, 10 percent for mechanical engineering, 10 percent for electrical engineering and 21 percent for civil engineering before factoring in tuition and forgone earnings. Programs that yield lower postgraduate earnings, such as M.B.A. and nursing programs, offer higher returns—16 percent and 24 percent, respectively.
“The wide range of returns indicates that reporting quantitative measures is necessary for both accountability and transparency purposes,” the report states. “For prospective students choosing between related degree programs such as architecture and civil engineering, the difference in earnings returns (10 percent for architecture and 21 percent for civil engineering) should be a critical factor in their decision.”
Women, on average, see higher returns on investment after attending graduate school than men, the report shows. The same is true for students who hold undergraduate degrees in relatively low-paying majors. For M.B.A. and J.D. programs, postgraduate earnings correlate with U.S. News & World Report program rankings—programs that rank higher yield higher returns. This is one factor Zhu and Altonji hope to dig into in future research, Zhu said.
In the meantime, Zhu said, he hopes the report will be useful to students looking at graduate programs as well as policymakers who develop accountability measures for institutions.
“This paper has a bunch of different estimates in it, so the estimates themselves could be of interest for individuals thinking about different programs. But I think the bigger-picture takeaway is that you really can’t rely simply on looking at earnings,” Zhu said. “If you look at the after-grad-school earnings of Harvard Business School graduates, of course it’s going to be high, but that really hides a lot of very important intricacies about the returns—one of which is that Harvard Business School graduates would have had high earnings even if they didn’t go to Harvard Business School.”
