Graduate Degrees in Education Show Negative Returns as AI Reshapes Job Market
A new analysis of 121 graduate degree programs found that some degrees produce negative financial returns after accounting for tuition costs. Psychology graduate degrees yield a -8% cost-adjusted return on lifetime earnings, while clinical psychology offers -5%. Social work and curriculum and instruction degrees also show negative returns.
The study, from the Postsecondary Education and Economic Research Center, used administrative data from Texas to calculate earnings outcomes for students who pursued graduate degrees versus those who stopped after undergraduate study.
Education degrees face particular pressure
Education-focused graduate degrees rank among the worst performers. Curriculum and instruction degrees-a direct measure of teacher preparation-generate negative returns, meaning graduates earn less over their lifetimes than they would have without the degree, even before subtracting tuition costs.
This finding matters for educators considering advanced credentials. Many pursue master's degrees expecting salary increases, yet the data suggests that expectation doesn't materialize for education degrees.
The broader pattern: AI and white-collar work
Graduate degree enrollment has grown substantially. The share of Americans with a graduate degree rose from 31% in 1993 to 42% in 2022, according to the U.S. Census Bureau. But recent research from Anthropic found that AI can theoretically perform the majority of tasks in white-collar fields including education, engineering, law, and business.
Meanwhile, recent college graduates now face unemployment rates higher than the overall workforce, according to the Federal Reserve Bank of New York.
Which degrees still pay off
Graduate degrees overall average a 17% earnings increase. Medical degrees offer the strongest returns at 173% cost-adjusted gains, even after accounting for average tuition of $228,959. Law degrees yield 41% returns and MBAs return 13%.
Computer science graduate degrees return only 6% after adjusting for costs. Electrical and mechanical engineering graduates see just 4% returns, while computer engineering offers 2%-despite engineering graduates earning six figures annually before graduate school.
Context matters for returns
Graduate degree payoff varies significantly based on undergraduate background. A humanities major pursuing an engineering master's degree may see much higher percentage gains than an engineering undergraduate pursuing the same degree, since the baseline earnings differ substantially.
Joseph Altonji, an economics professor at Yale and study co-author, said prospective students should examine both earnings potential and job outcomes before enrolling. "If you're thinking about graduate school, you want to get some information about what the earnings potential is coming out of the degree as well as the kinds of occupations and jobs it leads to," he said.
For educators, this research suggests that a master's degree in education or related fields may not improve lifetime earnings enough to justify the cost. Those considering AI training for teachers might find more immediate value in upskilling in AI tools than in traditional graduate credentials.
The findings also underscore a broader shift: Gen Z is questioning traditional education pathways as AI for education becomes a central concern for institutions and students alike.
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