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Do You Need a Grad Degree to Compete Right Now? Probably Not
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Anna Helhoski is a senior writer covering economic news and trends in consumer finance at NerdWallet. She is also an authority on student loans. She joined NerdWallet in 2014. Her work has appeared in The Associated Press, The New York Times, The Washington Post and USA Today. She previously covered local news in the New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She holds a bachelor's degree in journalism from Purchase College, State University of New York.
Karen Gaudette Brewer Lead Assigning Editor | Core Personal Finance
Karen Gaudette Brewer leads the Core Personal Finance team at NerdWallet. Previously, she guided students and their families through the ins and outs of paying for college and managing student debt on the Higher Education team. Helping people navigate complex money decisions and feel more confident brings her great joy: as the daughter of an immigrant, from an early age she was the translator of financial documents and the person who called the credit card company to fix fraud.
She joined NerdWallet with 20 years of experience working in newsrooms and leading editorial teams, most recently as executive editor of HealthCentral. She launched her journalism career with The Associated Press and later worked for The (Riverside) Press-Enterprise, The Seattle Times, PCC Community Markets and Allrecipes.com.
She is a graduate of the 2022 Poynter Institute Leadership Academy for Women in Media. Her writing has been honored by the Society for Features Journalism and the Society of Professional Journalists. In addition, she’s the author of two books about the Pacific Northwest.
More U.S. workers than ever hold a graduate degree. Years of intensifying job requirements and headlines declaring a master’s “the new bachelor’s degree” nudged a record number of students into grad school.
And yet more well-paying jobs no longer require a college degree at all. In this tight labor market, do college grads need a master’s degree to compete? Maybe not.
“We have all reduced our almost obsession with the master’s degree,” says Johnny C. Taylor Jr., CEO and president of the Society for Human Resource Management.
Anecdotal and statistical evidence shows employers were already pulling back degree requirements even before the pandemic: Data from a job market analysis done by the Burning Glass Institute show a reduction in middle-skills and high-skills requirements — jobs that require more education than a high school diploma — from 2017 to 2019.
If fewer employers are requiring grad degrees to gain entrance to good jobs, prospective students should assess whether advanced degrees are worth taking on debt.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.59-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 10/08/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
Variable APR
5.59-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 10/08/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.59-15.49%
Lowest rates shown include the auto debit. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 9/24/2024. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Variable APR
5.54-15.70%
Lowest rates shown include the auto debit. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 9/24/2024. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Credible lets you check with multiple student loan lenders to get rates with no impact to your credit score. Visit their website to take the next steps.
Some fields still require advanced degrees
Advanced degrees are still the key to entering certain professions: Medicine, law and teaching come to mind. In other fields, as long as you can convey you have the skills an employer is looking for, you can get a job without an advanced degree, says Brad Hershbein, senior economist and deputy director of research for the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan.
Advanced degrees could hedge against a recession
Employers are likely reducing education requirements to fill slots, which can be difficult in a tight labor market like this one, experts say. But that doesn’t mean it will last.
“Nobody can quite explain what we're going through now; I think everyone thinks it’s temporary,” says Gordon Lafer, a professor in the Labor Education & Research Center at the University of Oregon.
Holding an advanced degree could provide a safeguard for the future. If the economic tide turns, Taylor says, the degree becomes a differentiator.
Advanced degrees tend to correlate with lower unemployment rates compared with bachelor’s or associate degrees. But generally, any degree acts as a buffer against unemployment.
During the Great Recession, those with bachelor’s degrees and higher were more likely to keep their jobs, according to 2014 research by the Georgetown University Center on Education and the Workforce. The same goes for job retention during the early days of the pandemic, according to June 2020 data from The Federal Reserve Bank of San Francisco.
Graduate programs don't always pay off
What consumers need is data that show program-specific outcomes like graduates’ employment rates and average salaries. These are woefully difficult to find. For example, the College Scorecard, a data tool from the U.S. Department of Education, which provides information on outcomes like graduation rates and post-graduate salaries, doesn't include graduate-level data by major.
The lack of transparency makes it harder for prospective students to make an informed decision. And that could lead some to end up with debt they’re unable to repay.
“Not everyone realizes there’s a risk that it’s a bad financial investment,” says Hershbein.
Graduate loan debt has reached an all-time high, according to data from the federal government and think tanks like the Center for American Progress and Brookings. Unlike undergraduate loans, which have stricter limits on the amount of debt students can take on annually, federal Grad PLUS and private graduate loans allow students to borrow up to the cost of attendance, so it’s easier to rack up debt.
Your earnings after attaining a grad degree will largely depend on your field and employer. Outcomes in some fields are easier to predict than in others, says Hershbein.
“Teachers’ master’s degrees are carefully calibrated; based on union contracts they know what the pay is going to be,” says Hershbein. But outcomes for master’s in areas like public policy or fine arts are more of an unknown, he adds.
Master's programs are not all equal
Where you get your degree also matters. “If you’re getting an online master’s degree from the University of Phoenix it will pay off less than a master’s degree from the University of Pennsylvania,” Hershbein says.
Taylor says the nature of remote learning during the pandemic erased some of the bias around online programs, but employer preference is still skewed toward degrees from elite colleges.
“I think we have to be honest with ourselves: There's always an elitism that plays itself into the hiring process,” says Taylor.
For graduate students, attending a highly selective university might help them make professional connections to more easily get a job. And grad programs are “cash cows” for universities, says Hershbein. Universities count on the prestige of their undergraduate degrees to attract graduate students into expensive programs.
Students then rack up exorbitant debt for degrees that might not pay off.
An estimated 40% of master's degree programs do not pay off at all, according to February 2022 data from the Foundation for Research on Equal Opportunity, a nonprofit think tank.
The uncertainty means prospective students will need to do some legwork to prevent graduate school from harming their finances more than it helps their employment prospects. That means graduate applicants should:
Start with the graduate program costs on a school’s website.
Search earnings and entry-level degree requirements for occupations using the Bureau of Labor Statistics Occupational Outlook Handbook.