According to federal statistics, more than half of master’s degree students leave school with an average student loan balance of $66,000. While a higher salary from a graduate degrees can help offset this debt, experts suggest student debt payments should be below 10-15% of monthly income to be affordable. This analysis by Money magazine examined the average student debt and earnings from over 200 master’s degrees at 1,500 colleges to determine which programs have the best early return on investment (ROI).
Key Takeaways
- More than half of master’s degree students graduate with an average student loan balance of $66,000.
- Experts recommend student debt payments should be below 10-15% of monthly income to be affordable.
- This analysis examines the average student debt and earnings from over 200 master’s degrees to determine the best return on investment (ROI).
- Highest-paying master’s degrees and lucrative master’s programs can help offset the cost of graduate education.
- Analyzing the potential ROI of different graduate degrees is crucial for prospective students to make informed decisions.
Understanding Return on Investment (ROI) for Graduate Degrees
When considering the significant investment required for graduate school, understanding the potential financial return is crucial for prospective students. In this analysis, ROI is defined as the increase in lifetime earnings a student can expect from a graduate degree, minus the direct and indirect costs of attending graduate school. This measures the financial profitability of the graduate degree investment relative to its cost.
Factors Influencing ROI for Graduate Degrees
The ROI of a graduate degree can vary greatly based on factors such as the specific program, the student’s career path, the job market, and the costs of attending. Programs in high-paying fields like engineering, computer science, and healthcare tend to have the highest ROI, while degrees in the arts and humanities often fail to produce a positive return.
Importance of Considering ROI for Graduate Education
Given the significant investment required for graduate school, understanding the potential financial return is crucial for prospective students. The ROI estimates can help you decide whether graduate school is the right financial decision, as well as choose between different master’s degree programs. ROI should be a key consideration alongside other factors like personal interests and career goals.
Master’s Degrees with the Highest ROI
If you’re considering pursuing a master’s degree, it’s important to understand the potential return on investment (ROI) that different programs can offer. Not all graduate degrees are created equal when it comes to the financial payoff. Let’s explore some of the master’s programs that provide the highest ROI based on factors like average student debt, starting salaries, and monthly debt-to-income ratios.
Electrical Engineering
Master’s degrees in electrical engineering have the highest ROI, with an average debt of $25,762, average starting salary of $98,880, and average monthly debt-to-income ratio of just 3.2%. Electrical engineering graduates can specialize in areas like communication systems, power systems, and renewable energy, and are in high demand in growing industries.
Mechanical Engineering
A master’s in mechanical engineering has an average debt of $30,611, average starting salary of $83,705, and average monthly debt-to-income ratio of 4.4%. While a bachelor’s in mechanical engineering is preferred, other majors with strong math and science backgrounds can also apply. Mechanical engineers can specialize in fields like robotics, automotive research, and HVAC systems.
Taxation
The master’s degree in taxation has an average debt of $29,000, average starting salary of $76,806, and average monthly debt-to-income ratio of 4.7%. This program prepares students for careers as financial managers, CPAs, and CFOs, which have high earning potential beyond just tax prep or auditing.
Civil Engineering
A master’s in civil engineering has an average debt of $29,643, average starting salary of $73,650, and average monthly debt-to-income ratio of 4.9%. Civil engineers design infrastructure like buildings, bridges, and transportation systems, with newer specializations in areas like intelligent systems engineering. A master’s can increase earnings by nearly $14,000 per year over a bachelor’s.
Management Sciences and Quantitative Methods
This degree has an average debt of $40,426, average starting salary of $87,924, and average monthly debt-to-income ratio of 5.9%. It prepares students to collect, analyze, and manage data to solve problems, leading to careers as actuaries, financial analysts, insurance underwriters, and statisticians – a fast-growing occupation.
Clinical Nursing/Nursing Administration
While a bachelor’s in nursing can provide job security and a solid salary, a master’s is required to advance to roles like nurse administrator, teacher, or specialist. This degree has an average debt of $49,052, average starting salary of $99,358, and average monthly debt-to-income ratio of 6.1%. Nursing is also projected to see 45% job growth over the next 8 years.
Bioethics/Medical Ethics
This interdisciplinary program, combining medicine, law, philosophy, and sociology, has an average debt of $36,408, average starting salary of $76,534, and average monthly debt-to-income ratio of 6.3%. Graduates can advise on the ethics of clinical trials and work in a variety of settings like hospitals, pharmaceutical companies, and government agencies.
Accounting
While accounting may have a reputation for being boring, a master’s degree can prepare students for in-demand roles as CPAs, certified management accountants, and specialists in forensic accounting or fraud examination. This degree has an average debt of $31,273, average starting salary of $60,140, and average monthly debt-to-income ratio of 6.6%.
Business Administration and Business/Commerce
Master’s degrees in business administration (MBA) or business and commerce have average debt ranging from $38,673 to $38,731, average starting salaries of $69,384 to $77,164, and average monthly debt-to-income ratios of 6.6% to 7.2%. These flexible programs allow specialization in diverse areas like marketing, finance, and supply chain management, making graduates competitive across many industries.
Computer Sciences and Information Technology Administration Management
This combined degree area has average debt from $41,597 to $50,318, average starting salaries of $77,636 to $84,437, and average monthly debt-to-income ratios of 7% to 7.4%. With growing demand for cloud computing, data management, and cybersecurity expertise, computer science and IT management graduate degrees are well-positioned for strong job growth and high earnings.
Evaluating the Financial Value of Graduate Education
This analysis found that the median master’s degree increases lifetime earnings by $83,000 after accounting for the costs of graduate school. However, there is significant variation – 40% of master’s degrees fail to produce a positive return, while some, like those in engineering and computer science, can be worth over $1 million. Prospective students must carefully evaluate the financial value of any graduate program.
Factors to Consider When Choosing a Master’s Degree Program
When selecting a master’s degree, students should consider not just their personal interests and career goals, but also the potential financial return on investment. Analyzing data on typical salaries, job growth, and earnings for graduates of different programs can help ensure the degree will pay off in the long run.
Importance of Considering ROI for Long-Term Career Success
Given the substantial investment required for graduate school, understanding the potential ROI is crucial for prospective students. The estimates provided in this analysis can help inform decisions about whether graduate education is the right financial choice, as well as which specific programs offer the greatest long-term earnings potential and career opportunities.
