Students and families are concerned about rising college costs and growing student debt levels, which has prompted policymakers to begin holding postsecondary programs accountable for their students’ future earnings. Early accountability efforts focused only on certificate programs and degree programs offered at proprietary institutions, but policymakers are beginning to consider accountability measures for master’s degree programs.
Some stakeholders have raised concerns that an earnings-based accountability test might disproportionately penalize master’s degree programs serving larger concentrations of students from disadvantaged gender and racial and ethnic backgrounds. An accountability test that affects programs offering little value to students is a good outcome, but if lower performance on an earnings-based accountability test reflects factors such as occupational segregation or labor market discrimination against women and people of color, it could unfairly penalize these groups and the programs that serve them.
Key Findings
Through an earnings-based accountability test called the “net earnings test” (NET), I examine the types of master’s degree programs that leave students worse off after attending. Specifically, the test measures how much more a typical graduate from a master’s degree program earns relative to a typical student with only a bachelor’s degree in the same broad field of study and living in the same state. I also examine whether failing this test is correlated with the types of students the master’s degree program serves. The key findings are as follows:
- About 70 percent of master’s degree programs lead to positive returns and pass the NET.
- The master’s degree programs that have the highest NET pass rates include nursing and educational administration.
- Master’s degree programs that have the lowest pass rates include mental and social health services master’s degrees, where only 3 percent of programs would pass the NET.
- On average, master’s degree programs that fail the NET have larger shares of female students (66 percent) relative to programs that pass the NET (61 percent).
- Master’s degree programs that fail the NET have smaller shares of white students and larger shares of Black students relative to passing programs.
Implications
These findings may complicate efforts to enact accountability policies for master’s degree programs. Some programs that fail the NET may provide their students exceptional value and educational experiences but would get labeled as “low quality” because their students’ earnings outcomes are lower because of additional challenges their students face in the labor market. To distinguish between these programs and programs whose outcomes are attributable to low quality—such as mismanagement of resources, providing students with poor classroom instruction, and lackluster career support services—there are a few ways policymakers could modify the NET.
One option is to create exemptions for certain programs or institutions. These might include programs that provide large social value but typically offer lower earnings, such as social workers or institutions like historically Black colleges and universities (HBCUs) or tribal colleges. But one possible issue is that exemptions could give a free pass to programs at exempted institutions that are mismanaging resources and offering poor instruction.
Another option is to vary the threshold for passing the NET based on the share of students with certain sociodemographic characteristics within a program. But in addition to the possibility that institutions or programs at risk of sanctions could game this metric by targeting their recruitment efforts at low-income students, some stakeholders may critique this policy as giving certain types of institutions an undeserved free pass.
Finally, policymakers could consider applying the NET evenly to all master’s degree programs but alongside a large investment in institutions that have experienced a legacy of discrimination. This could enable institutions to improve instructional quality, facilities, and student support services, all of which may be important inputs when determining students’ earnings outcomes related to targeted investments in HBCUs, tribal colleges, and other minority-serving institutions. But it is unclear how large or how frequent such an investment should be, and there is no guarantee the targeted investment will be used in ways that enhance student outcomes.
Policymakers do not have the data to distinguish between programs labeled as low quality because they offer students little educational value and programs labeled as low quality because they serve larger shares of students from disadvantaged backgrounds. But it is important to capture information on program quality (e.g., educational outcomes, instructional quality outcomes, and career and student support services) to better distinguish whether a program’s low earnings outcomes are attributable to the program’s operation or to broad societal factors outside an individual program’s ability to address.
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Additional Resources
- A Dream Derailed? Investigating the Causal Effects of College Closures on Student Outcomes
- Towards a Framework for Accountability for Federal Financial Assistance Programs in Postsecondary Education
- An Earnings Test for Master’s Degrees: Identifying Programs at Risk of Failing a Proposed Rule for Federal Loans
