Graduate student debt is out of control.
Among master’s degree holders, the average debt is $83,651—over double that of undergraduates. In total, 60% of all master’s degree holders have some form of student loan debt. These numbers are according to data compiled by the Education Data Initiative.
The staggering rise in graduate student debt is what inspired a recent report studying the financial returns of online graduate education, published by ThirdWay, a self-described center-left think tank.
The report analyzed more than 1,700 online graduate programs and determined that nearly half—837—did not provide any earnings boost for graduates beyond what they earned four years after a bachelor’s degree.
Chazz Robinson, the report’s author and education policy advisor at ThirdWay, says graduate students largely measure value from an economic boost and that too many programs are just leaving students with mounds of debt—and no salary boost to help pay it off.
While ThirdWay chose not to release the specific degree names of the “no ROI” programs, Robinson explains to Fortune that even in public service fields like social work and nursing assisting, in which salaries may be lower, it doesn’t mean graduate school—especially online–should be expensive.
“Our issue is that if they're super expensive grad degrees, we want policymakers and institutions alike to really be addressing how much these programs cost and the compensation for these programs, so students are not saddled with these insurmountable debts with degrees that aren't necessarily paying off for them economically,” Robinson says.
Of the hundreds of schools with “no ROI” programs (many of which are for-profit), nine schools in particular were among the top offenders, including Strayer University, Walden University, and Grand Canyon University. Together, the nine institutions take in a reported $4.6 billion in taxpayer-funded student loans.
A call for transparency
The researchers took the median earnings of graduates with an online master’s degree four years after attending each program and compared it to national median earnings of bachelor’s degree.
A lack of transparency from schools about the cost of their programs and the potential outcomes when it comes to jobs and salary can truly hurt students more than others, particularly low-income, minority students, Robinson explains.
“If I already came in with, say, a low income background in debt from undergrad, and then I'm expecting that a grad degree is going to help me be the generational income level to overcome the social stratification I've been dealing with, and then that doesn't happen—that is detrimental,” he says.
More transparency, he says, would not only help policymakers analyze the education world and make changes but it also helps consumers better weigh the pros and cons of a particular institution or even career path.
University response
Fortune reached out to several of the universities mentioned in the report who were noted as having multiple “no ROI” online graduate programs.
Strayer University said in a statement they were unable to comment on a report that they were not privy to its methodology, but added:
“It's important to keep in mind that Strayer University is an open access institution that primarily serves working adult students who have historically been underserved by traditional higher education. Strayer is committed to helping all students achieve economic mobility and is proud of the successes we have achieved in providing high-quality education to working adults.”
GCU explained to Fortune that “ROI lists” like the one published by ThirdWay are not an adequate measure of student experience and the school makes tuition affordable and has low student loan default rates
“As is the case with the gainful employment regulations, not all academic programs can be measured simply by first-year salary levels," the GCU spokesperson says. "For example, many students choose degrees in theology, teaching, social work or counseling not because they are high-paying jobs but because it is a lifestyle choice. They deem the work more meaningful to their quality of life."
"Ivy League schools and expensive private or public universities may not make this “ROI list” because they don’t have a significant number of online programs, but charging $50,000+ for a teaching degree or social work degree with low pay levels is the bigger issue that needs to be addressed," the spokesperson adds.
The U.S. Department of Education classifies GCU as a “private, for-profit” institution, but the school told Fortune that the state of Arizona and the IRS recognizes it as non-profit.
In October 2021, the Federal Trade Commission put 70 for-profit colleges “on notice” that false promises about graduates’ job and earning prospects could result in significant financial penalties.
The takeaway
Before enrolling in graduate education, it is more important than ever to understand what you are signing up for. Know how much the cost of attendance will be, including tuition, fees, and required textbooks. If you have to sign a student loan, take the time to read the fine print on when you have to start making payments.
While some online graduation programs may not provide income boosts to students, hundreds more do provide career accelerations. For example, online MBAs generally lead students to a promising future in business.
It can also be a great idea to find a recent alumni of the program via LinkedIn or other means and see if they would be willing to discuss their experience during and after schooling. Were they able to land a job after graduating? In what field? What’s their salary like? Was the degree worth it?
Above all, keep an eye out for red flags and know you can carve your own path. There are thankfully hundreds of different opportunities when it comes to online graduate education—at both for- and non-profit schools. If a program is not overly transparent with tuition or career pathways, then maybe check out somewhere new; make sure your educational journey is worth your time and money—and will lead you to where you want to go.
Note: Fortune Education does not invite for-profit institutions to participate in its graduate program rankings.
