Policymakers are increasingly interested in evaluating higher education programs using data on students’ postenrollment earnings. Although much of this interest has focused on outcomes for undergraduates, a new bill sponsored by Senate Republicans would apply an earnings test to programs at all degree levels at all types of institutions.
The Streamlining Accountability and Value in Education for Students Act, sponsored by Senator John Cornyn (R-TX), would require that the median earnings of master’s degree students in each program exceed the median earnings of working individuals ages 25 to 34 with only a bachelor’s degree in the state where the institution is located. Programs that fail this test in two out of three consecutive years could no longer receive federal student aid.
Key Findings
We compared median earnings reported in the College Scorecard four years after completion for each program with the median earnings of all bachelor’s degree holders ages 25 to 34 reported in the US Census Bureau’s American Community Survey for the state where the institution is located. Using these data, we found the following:
- About 14 percent of master’s degree programs would fail the bill’s earnings test.
- Among the largest master’s degree fields, programs in nursing, business, and accounting have the highest pass rates, with 100 percent of programs passing.
- Mental health (40 percent), counseling (70 percent), and teacher education programs (between 60 and 80 percent) have some of the lowest passing rates.
- Teacher education and social work account for nearly a quarter of all failing programs, and those in mental health, psychology, and counseling make up another 22 percent of failing programs.
- When comparing states, generally, the higher the earnings benchmark in each state, the lower the share of master’s degree programs that pass. Virginia has the lowest pass rate, with only 56 percent of programs passing the test. Massachusetts is the next lowest, with 74 percent passing.
- Under an approach that compares earnings within similar fields of study (i.e., comparing earnings for a master’s in education against those with a bachelor’s degree in education), nearly every field that had relatively low pass rates in the first analysis improves.
Implications
As policymakers continue to explore potential reforms to federal aid programs that tie eligibility to earnings, information on the likely effects of such proposals can help ensure the policies have their intended effects. Using an unadjusted benchmark that reflects all bachelor’s degrees can help ensure master’s degree programs meet a minimum earnings threshold. That approach may be best suited to discouraging institutions from offering programs that lead to low earnings, regardless of field of study, and it might pressure employers to raise wages for low-earning professions.
If policymakers are concerned that the unadjusted earnings benchmark would affect too many public service and mental health professions, however, the data show that adjusting for field of study allows nearly all these programs to pass the earnings test and can be an effective policy for identifying programs within each field that have the weakest outcomes.
Get the Data
Additional Resources
