Of the 18 most popular fields included in the report, the return on investment is highest for Pharm.D. graduates, who saw an average income increase of 114%.
On average, attending high school increases a student’s lifetime earnings by 17 percent. But that return on investment varies greatly depending on what they study, according to a new study published by the Postsecondary Education & Economics Research Center at American University.
Graduate school has grown in popularity over the past few decades. In 1993, 31 percent of bachelor’s degree holders aged 35 to 39 also had a degree. As of 2022, that share has increased to 41 percent, the report said. Of the 18 most popular fields included in the report, the return on investment is highest for Pharm.D. graduates, who saw an average earnings increase of 114 percent after graduation. MDs and JDs also see higher returns—110 percent and 59 percent, respectively.
However, those numbers don’t take into account what the student paid to get the degree or the wages they may have lost while in school. After combining those figures, M..D programs come out on top, offering a 173 percent increase in student lifetime earnings. Pharm.D. programs offer an average increase in gross earnings of 68 percent, JD programs by 41 percent and master of public administration programs by 26 percent.
Professional degrees in social work, medical science, science and curriculum and instruction deliver the lowest return on student investment, the report shows. Students who graduate with a master’s degree in social work earn an average of 7 percent more than they would without a degree, but after accounting for education costs and salary deductions, these programs yield a negative return of 2 percent. In other words, their lifetime earnings decrease because they have graduated from school. Clinical psychology programs offer a negative return of 5 percent, curriculum and instruction programs a negative return of 2 percent, and psychology—a popular major among undergraduates—a negative 8% return.
But more money isn’t always a goal for graduate students, said Zhengren Zhu, assistant professor of economics at Vassar College and co-author of the report.
“As economists, our goal is to look at salary returns, but obviously, in some of these programs, people are not going to increase their salaries,” he said. “Salary is not everything.”
A higher postgraduate salary does not always mean a higher return on investment, Zhu and his co-author, Yale University economics professor Joseph Altonji, wrote in the report. Engineering, for example, offers the highest average salary for graduates but only an “average” return on investment—8 percent for computer engineering, 10 percent for mechanical engineering, 10 percent for electrical engineering and 21 percent for civil engineering before they study and earn. Low-income postgraduate programs, such as MBA and nursing programs, offer higher returns—16 percent and 24 percent, respectively.
“The wide range of returns shows that reporting quantitative measures is necessary for both accountability and transparency purposes,” the report said. “For prospective students choosing between related degree programs such as architecture and civil engineering, the difference in return on earnings (10 percent for architecture and 21 percent for civil engineering) should be an important factor in their decision.”
Women, on average, see higher returns on investments after high school than men, the report shows. The same goes for undergraduate students in lower-paying majors. For the MBA and JD programs, the postgraduate salary is comparable US News & World Report program rankings—programs that rank higher yield higher profits. This is one aspect 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 and policy makers developing accountability mechanisms for institutions.
“This paper has a lot of different metrics in it, so the metrics themselves can be interesting for people who are thinking about different programs. But I think the big picture is that you can’t rely on looking at income,” Zhu said. “If you look at the salary of Harvard Business School graduates, of course it’s going to be higher, but that really hides a lot of very important issues about returns—one of which is that Harvard Business School graduates would have earned a higher salary even if they hadn’t gone to Harvard Business School.”
