Is That New Degree a Waste of Money? Here’s How to Know
A data set reveals how programs boost income — or don’t
If you want to know whether a career credential or degree is a waste of money, the person to know is Lesley Turner, a professor of economics at Vanderbilt University. She spends her days immersed in data about the costs and value of higher education, and can attest that enrolling in many of the nation’s certificate, associate’s, bachelor’s and graduate degree programs is throwing money into the wind. “Not all programs are worth the time and money,” Turner says.
She knows this because she crafts education policy for the Brookings Institution, and like every good policy wonk, she is deeply immersed in the quirks of that avalanche of data. Each year, the federal government shells out billions of dollars to colleges and universities, which receive that funding with very few strings attached. It’s a merry-go-round of cash. “Really, the only requirement on the books is that schools with very high rates of student loan defaults risk being kicked out of federal student aid programs. This is very, very rare,” Turner says.
The Biden administration is discussing inserting accountability into this whirl of billions, and one of Turner’s jobs is to figure out what sort of regulations might actually have the intended effects — and not, say, cut funding to schools serving high-risk students or education majors, two groups with low post-grad earnings. She, along with her colleague Jordan Matsudaira, recently analyzed a wide range of loan repayment rates at U.S. schools, as well as the change in income that students can expect, compared to students who did not enroll, when factoring the cost of the higher-ed program. (This is called the “net earnings premium.”)
This is relevant to you because finding statistics on graduates’ finances is difficult. You could click over to the U.S. Department of Education’s College Scorecard, which includes data like future earnings by major — though the data is often spotty.
So Turner is helpfully sharing her data: You can nerd out and dig into her spreadsheet to see school-by-school data, including average post-grad debts, loan repayment rates, and student body breakdowns. The spreadsheet is particularly useful for graduate programs, for which data is even harder to come by. Here’s how to find the data: Go to the spreadsheet tab called “Viz_Data_School” and find the institution you’re interested in. Then click back to the 2nd tab, “Variable descriptions & Sources,” for what each of the columns means.
Prepare to be surprised. Well-regarded schools do not necessarily produce high-earning graduates, and programs fail to justify their own costs across nonprofit, public and for-profit institutions. “At any credential level — associate degree, master's degree — you see a wide range of earnings outcomes and loan repayment outcomes, by field of study and by sector,” Turner says. “A lot of attention has been paid to for-profit institutions, and it’s true that on average, those students face poorer outcomes in terms of loan repayment and post-college earnings. But there’s actually a lot of overlap in outcomes.”
“Failing” programs, which are a bonfire of students’ money, are not unusual. They’re the ones with negative net earnings premiums (column AL in Turner and Matsudaira’s spreadsheet), as well as negative loan repayment rates after three years (column M) — which means that graduates are financially harmed by the program compared to students who did not enter the program. Where there’s smoke, there’s fire. “Schools with one or two failing programs tend to have a lot of failing programs, especially post-baccalaureate,” says Leonardo Restrepo, a research assistant on the project.
When choosing where to apply, Turner has a few suggestions:
1. Dig into individual programs’ student outcomes. “It’s common for schools to have some ‘good’ programs and some ‘bad’ programs,” Turner says.
2. Beware of certificate programs. These typically one-semester or one-year programs are often hosted by community colleges in vocational fields like office management or phlebotomy. Though many are valuable, a significant percentage of graduates fare worse than cohorts who did not enter a certificate program.
3. Pay attention to nonprofit minority-serving institutions. Turner was surprised to see that these graduates are doubly likely to have students emerge at a loss and unable to pay their loans, compared to graduates of all nonprofits. She says this is likely a reflection of other societal forces, such as discrimination in the labor market, or poor state support of the school. More research is needed here to understand the dynamics; just be aware of it.
4. Schools that spend more on instruction have better outcomes. These numbers are usually hard to come by, but they are in Turner and Matsudaira’s spreadsheet, under the tab “Viz_Data_School” in column J, which tracks average instructional spending per full-time student. High tuition does not correlate with better student outcomes.
And most importantly, pick your field carefully. “A lot of attention is paid to getting students into college. Much less is paid to helping them choose what to study,” Turner says. “What you study matters a lot. Outside of the very elite institutions, what institution you go to is going to matter less than what you focus on.” She can help you with this choice too. She built a handy visualization tool where you can see student outcomes across entire fields.