Watch Out For Advanced Degrees That Don’t Pay Off

The Myth of Advanced Degrees as a Path to Wealth

Introduction

For many, pursuing an advanced degree such as an MBA or PhD is often seen as a surefire way to boost income and accumulate wealth. However, this belief doesn’t always hold true. In fact, when the economy takes a downturn, many individuals return to college seeking refuge in the hope that higher education will secure their future. But the reality is more complex, and the current labor market tells a different story.

The Current State of the Job Market

Recent data from the Bureau of Labor Statistics (BLS) indicates a relatively low national unemployment rate of 4.1% as of February 2025. Despite this, the job market is showing signs of tightening. Reports from Bloomberg and Business Insider highlight struggling MBA graduates and troubling hiring trends for software engineers. Additionally, mass layoffs across various industries, including tech, hospitality, and the federal government, are flooding the job market with newly unemployed workers, intensifying competition.

The ROI of Advanced Degrees

Before considering an advanced degree, it’s crucial to evaluate its return on investment (ROI). Many degree programs, especially in fields like art, education, and social work, offer little to no financial return. According to Catherine Rymsha, a lecturer at the University of Massachusetts Lowell, researching post-graduation earnings and job market needs is essential. The Foundation for Research on Equal Opportunity (FREOPP) study reveals that 43% of master’s degree programs and 23% of doctoral and professional degrees have a negative ROI, leaving many graduates financially worse off.

Degrees That Pay Off

While many advanced degrees fail to deliver financially, certain professional degrees in fields like dentistry, law, and medicine still offer lucrative returns. These degrees often lead to high-paying careers and are typically from prestigious institutions. However, it’s not just the field that matters; the choice of school and its reputation also play a significant role in determining the success and ROI of a degree.

The Downsides of Unrewarding Degrees

Pursuing an unrewarding degree can lead to more than just financial burden. Higher education advisor Dan Ulin emphasizes the emotional trauma of entering a field with little demand and the opportunity cost of time spent studying or away from family. Financial aid specialist Bethany Hubert highlights the potential need for student debt if employer tuition assistance or scholarships aren’t available.

The Bottom Line

If the ROI of an advanced degree is a concern, there are alternative paths to career advancement. Certifications, hands-on experience, and networking can often provide the necessary skills and opportunities. Kevin Ladd of Scholarships.com notes that many individuals end up in careers unrelated to their field of study, emphasizing the importance of balancing academic achievements with practical experience. Therefore, it’s wise to consider all options and evaluate the balance between further education and real-world experience before committing to an advanced degree.