After Certificate programs, Master’s Degrees Are the Second Biggest Scam in Higher Education
Last week, the Wall Street Journal published a troubling exposé on the crushing debt burdens that students accumulate while pursuing master’s degrees at elite universities in fields like drama and film, where the job prospects are limited and the chances of making enough to repay their debt are slim.
For colleges and universities, master’s degrees have essentially become an enormous moneymaking scheme,
The line between for-profit and nonprofit education has been utterly blurred. There are, of course, good programs as well as bad ones, but when you scope out, there is clearly a systemic problem.
Kevin Carey, director of the education policy program at New America argued for years that “universities see master’s degree programs as largely unregulated cash cows that help shore up their bottom line,” and shown how even schools like Harvard offer effectively predatory programs.
In 2019, Carey took a long, dispiriting look at the rise of so-called online program managers, or OPMs—the private companies like 2U that major universities from Yale to small schools like Oregon’s Concordia University use to build their online offerings. These companies design and operate courses on behalf of schools—sometimes essentially offering a class in a box—that the university can slap its branding on. The OPM then takes as much as 70 percent of tuition revenue. That money is largely being funded with government loans, which may never be paid back.
Carey claims,
“Probably the biggest scam in higher education remains one-year certificates offered by shady for-profit colleges that cost, like, $25,000 and don’t lead to a job. Master’s degrees are probably No. 2. Certainly, within the confines of colleges that are not legally for-profit, they are the biggest scam by far.”
In some ways, what makes master’s degrees a little different from those one-year certificate programs that are offered by fly-by-night schools is that they are being delivered by Ivy League universities and online schools alike.
They’re more similar than they might seem. Many of them are one-year certificate programs. We don’t call them that. We call them master’s degrees, but that’s part of the problem. They are in fact often one-year job-oriented programs that are heavily debt-financed, marketed very aggressively through online web advertising. They purport to provide very specific economic opportunities in a given field. It’s just -- one is being marketed to students who just graduated from high school and the other is being marketed to people who just graduated with bachelor’s degrees, but other than that, they’re kind of the same.
For example, the Columbia School of Journalism offers what is essentially a 10-month master’s degree that costs $70,000 or something like that. It starts in September, ends in June. You can only do so much in less than a year. It’s completely a career-oriented degree. There are thousands upon thousands upon thousands of [career-oriented] programs out there.
You can call almost anything a master’s degree. Master’s degree programs do not have to publish their admission statistics, which creates, I think, an enormous temptation for institutions that have very attractive brand names, that are attractive in no insignificant part because their undergraduate programs are very selective, to open up the floodgates on the master’s side and pay no penalty in the market because people don’t know they’re doing it.
It’s gotten really difficult to tell the difference between for-profit and not-for-profit higher education when it comes to master’s degrees. Online program managers—essentially private companies that operate behind the scenes and quietly run online master’s degrees on behalf of nonprofits, whether it’s USC or a small Bible college.
I think, from a regulatory standpoint, all master’s programs should be treated as for-profit, because I think they essentially are. I think if you just look at what nonprofit and public institutions charge in master’s programs, they are charging market rates. There’s really not much difference between them, just whatever the market can bear. I think they act like for-profit companies in the way they engage in marketing. They are profit maximizers. Their pricing decisions don’t reflect some public mission in terms of affordability or anything like that.
The statistic you hear is that we’re at the point where, probably, at least half of all enrollments in master’s degree programs are online, way more than undergraduate, and probably more than doctoral programs, because doctoral programs tend to be much more intensive with relationships to mentors and faculty, and a lot of doctoral students teach on campus. People who get master’s degrees often or maybe even usually are working. They’re older. They often have families. They have jobs. It’s a lot more convenient for them to study online.
However, where online does intersect with the more troublesome parts of this issue is that gave colleges with valuable brand names an opportunity to monetize those brands in a way that never existed before, so you could be a very famous college that everyone knows about and people want to attend, but before the internet you could only more or less serve people who were able to travel and live where you were. Now, all of a sudden, you can have a global brand name that can be accessed globally, and the whole premise of the for-profit OPM market is that all of the money in online education is at scale.
The victims are certainly not the colleges. They get paid upfront. They bear no risk in these transactions. The students certainly are being victimized. Their trust is being exploited. People have been instructed by the culture that they should trust colleges, and that trust is being turned into money by colleges with very little thought for the consequences, and the American taxpayer is going to pay part of this bill.
It is the federal government that is lending the vast majority of loans used to pay for graduate school. Anyone who reads about how we have $1.7 trillion in outstanding student loan debt should always keep in mind that almost half of all new student loans in particular are for graduate school, not for undergraduate. You hear somebody that’s got $200,000 or $300,000 in debt, they almost surely went to graduate school. They didn’t borrow that much money from the Department of Education to get a bachelor’s degree. How it’s going to play out in terms of who’s actually going to pay their loans back is complicated both because it takes a long time to pay loans back, also because so many graduate students are now enrolled in income-based loan repayment programs that in theory offer the promise of loan forgiveness.
We need a stronger regulatory hand in the master’s degree market. One, I would put a cap on how much money you can borrow to go to graduate school. I would put a cap on how much of your graduate school loans can be forgiven under any kind of loan forgiveness program, so we’re not in this situation of unlimited money, because I think unlimited money is a moral hazard. We need more transparency around how selective are graduate programs, how effective are they in helping people get jobs in their field and pay their loans back, and we need to regulate programs around their effectiveness.
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