Why 40% of Master’s Degrees Aren’t Worth It (and Which Are) w/Preston Cooper

Mindy:
Welcome to the BiggerPockets Money Podcast, show number 293, where we talked to Preston Cooper from the Foundation for Research on Equal Opportunity about the ROI of your graduate degree.

Preston:
From a purely financial perspective, pursuing the degree earlier is going to be better, but that doesn’t necessarily mean that you absolutely should pursue the degree earlier because it’s important also to take some time in your career to figure out, “Well, what is it that I really want to do?” And if you get the MBA at 23 and then you decide at 25, “I really hate business. I really don’t like doing this,” that’s not a great situation for you to be in. So while I would say that from a very narrow financial perspective, yes, it is going to be better to get that degree earlier, that doesn’t mean you should always pursue it earlier, because it is important to be sure that this degree is what you want, that this degree is what is going to help you advance your career before you take the plunge and decide to enroll in graduate school.

Mindy:
Hello. Hello. Hello. My name is Mindy Jensen and joining me today are two co-hosts. Dave Meyer, BiggerPockets, resident numbers nerd, and the host of our latest podcast called On The Market where he dives deep into his favorite subject data about the real estate market, along with an impressive rotating panel, including Kathy Fettke, Jamil Damji, James Dainard and the Henry Washington.

Dave:
Wow, Mindy, thank you for that very descriptive intro, I appreciate that.

Mindy:
Well, thank you for joining me today Dave and Scott Trench is here too.

Scott:
I know there’s a need to be economical with your intro, but dang, that’s a-

Dave:
You got the slight, man.

Mindy:
We don’t have time, we have Preston Cooper here today, he’s back. He’s going to talk to us about graduate school degrees and he has so much information. We don’t have time for chit chat, but we do have time for our normal intro. So Scott and Dave and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.

Scott:
That’s right whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business, or just determine if going to college or getting that master’s degree is worth it. We’ll help you reach your financial goals and get money out of the way, so you can launch yourself towards those dreams.

Mindy:
I am so excited for today’s guest, it is Preston Cooper, you last heard him on episode 251 of this same show, where he talked about the ROI of your undergrad degree or your potential undergrad degree. And it was very interesting what he shared with us then, and he’s back today to share with us the ROI of more than 11,000 master’s degrees and 2300 advanced degrees like PhDs or professional degrees. And I thought it was a lot of fun, Dave, what did you think of today’s show?

Dave:
I am constantly impressed by Preston. I think we all sort of fond over him a little bit and I don’t know if he gets uncomfortable by how impressed we are by him, but it’s genuine. His work is just so good and it’s so thorough, he really has an answer for everything and really understands this topic really deeply. And it’s a super important topic, so I hope everyone out there listens to the very end because he gives some great advice on how you should think about a graduate degree.

Scott:
Preston Cooper you could say is the Dave Meyer of the higher education space and the ROI of that kind of stuff, or maybe Dave Meyers is the Preston Cooper of the real estate space here. But I think you guys have a very similar skillset in terms of how you think about, and like to exhaustively analyze your fields of expertise. And I love the way that he has thought of every conceivable impact and influence on college ROIs as completely open to things, there’s genuine excitement when we bring questions that maybe weren’t part of the study, but he thinks are great considerations like the tax thing that we discussed later on in the show. And so I think it’s a very similar mentality the approach that you bring Dave to your real estate data analytics.

Dave:
All right. Well, thank you, Scott, that’s very nice of you being compared to Preston is always in always an honor. But if you are interested in the type of work that Preston and I do, where we analyze different data news and current events. You should definitely check out BiggerPockets newest podcast it’s called On The Market and we actually have a new episode out today.

Scott:
Who’s it with?

Dave:
So each week I actually chat with a panel of real estate experts, we have Henry Washington, we have Kathy Fettke and Jamil Damji on this week’s episode, and we are talking about the best housing markets to invest in in America. So each one of our experts is coming in with their two favorite markets, explaining all the data and economics behind why they like these markets. And you can get in on these excellent markets ahead of everyone else if you listen to On The Market today.

Scott:
Yeah. I think also you give out a little goodie in some of the episodes that will have the list of the data driven best markets perhaps, that you can download available only to listeners of On The Market as well. So if you want that data got to go check that out at Dave’s new show On The Market, available wherever podcasts are hosted.

Dave:
Yeah, absolutely. So we do this thing where every couple of weeks we release a data drop where I prepare all sorts of information, sort of like what Preston does for his incredible study, but we do it for the real estate market. And if you listen, you might hear one of these data drops where we give away this incredible information for free, but there’s also all sorts of great discussion perspectives every week on On The Market. So I really hope you check it out, it’s a really fun and worthwhile show and we hope to see you there.

Mindy:
You can listen to Dave’s episode that releases today at biggerpockets.com/otm03, that’s OTM, On The Market, episode three or wherever you get your podcast. Okay, guys, I’m so excited to bring in Preston. We talked for a long time today because absolutely everything he says is pure goal. Preston Cooper wowed us with his impressive exhaustive research on the ROI for undergrad degrees, way back on episode 251 of the BiggerPockets Money Podcast. And if you have anyone in your life considering attending college and haven’t listened to it yet, you need to and they need to listen to it too. It’s kind of eyeopening and a little bit surprising some of his findings. At the end of that episode, Preston casually mentioned that he was working on similar research for graduate degrees as well, and I asked him to let me know when his research was complete so we could have him back on the show. Well, he’s finished up his study and the results of this one are equally surprising. Preston Cooper from the Foundation for Research on Equal Opportunity, welcome back to the BiggerPockets Money Podcast.

Preston:
Thank you, Mindy, it’s great to be back on the show and thank you for your kind words about my research.

Mindy:
I can’t imagine how much time you spent looking at numbers, I was reading your report and it’s just combining through all of these things. And it’s like we checked in this and checked in that and I’m going to let you describe all of that. But holy cow, wow, it’s so impressive. I love it. And we are going to talk for about a 100 hours and I want to jump right into it, but can you give us a quick overview of what your most recent research covers?

Preston:
Absolutely. So what we’re looking at in my most recent research is what is the financial value of graduate school? So we took 11,000 different master’s degrees and about 2300 different doctoral and professional degrees, and we asked, “Well, what are these actually worth financially?” So what is the increase in earnings that you can for having gotten this degree, and what are the costs associated with getting that degree? What are you going to pay in tuition? How much time do you need to spend out of the labor force in order to earn that degree? Basically, we did the math to ma to add all these costs and benefits up and we came up with the answer for each of nearly 14,000 graduate degrees, what are these actually worth? How much further ahead can you expect to get financially for having gotten one of these degrees?

Mindy:
Okay. I just want to clarify a master’s degree is about two years of full-time school, but when I looked up how long it takes to get a PhD, the timeline varied greatly from the extremely rare 12 to 24 months to all up to six to eight years. So I just want to be clear that there is not only a financial commitment, but there’s a pretty serious time commitment in getting your advanced degree. So I just want to plant that seed in case anybody was confused on how long it takes to actually get the degree timewise.

Preston:
Absolutely. And this opportunity cost aspect is so important to consider because I think often when people are considering a higher education getting a master’s or advanced degree, they look at the cost of tuition, which is super important, no doubt, but it’s also important to consider what else could you be doing with your time? If you’re in a job earning $80,000 a year right now, and you’re going to take two years out of your life to get an MBA, that’s certainly a cost that you need to consider that you’ll be out of the labor force for two years, giving up $160,000 potentially in lost earnings. And it’s something that is definitely something you should keep in mind when you’re deciding whether to pursue graduate school.

Scott:
I think there’s a bunch of questions that pop into your mind when going through this and so I’ll just kind of spitball a few for you with this, but one thing that I think a lot of… I think that you mentioned the MBA is the most popular degree in your study. And a hypothesis I would’ve had coming into the study would be, hey, a degree from Harvard or Chicago, or Wharton is going to be dramatically different from an ROI perspective, from one from maybe the local state school with that based on the reputation that those name brand top league Ivy schools have, especially in the MBA department. Can you walk us through your thoughts on what the research has to say about that hypothesis?

Preston:
Absolutely. So I think when we’re talking about what does the research say on MBAs, it’s important to consider that there are multiple components to ROI. So there’s realized earnings, if you get the degree, what are your earnings going to be for the rest of your career? But then there’s also counterfactual earnings where if you didn’t get the degree, but you were still the same person in that parallel universe where you don’t have the graduate degree, what would you have earned? And it turns out that counterfactual is going to be very different for different graduate degrees. And the reason is that different college majors are going to feed into different graduate degrees, so an MBA is more likely to draw students who have undergraduate degrees in finance, economics, business, not universally, but disproportionately it’s going to be those majors. But a degree like the master’s of social work, that’s probably going to draw people who have bachelor’s degrees in psychology, sociology, anthropology, social work as an undergraduate degree, so they’re going to have very different earnings potential from the people of a bachelor’s degree in economics or finance.
And so that brings me to the question of MBAs, so you’ll see reporting in the media that basically says MBA salaries are crazy high this year, they’re a 100K or whatever, they’re really, really great, but it’s also important to consider what is the counterfactual for those MBA degrees. Because if you have a bachelor’s degree in finance or economics, you probably already have a pretty firm foundation earnings wise, and so it’s not entirely clear that the MBA is actually going to add that much more. So what we did is we crunched the numbers, we said what is the median earnings that you get with an MBA? And what are the median counterfactual earnings for those people who aren’t getting an MBA, but if they were in a parallel universe where they didn’t have that degree, what would they have earned? And the gap is actually not that big.
So we estimate that median earnings for someone with an MBA are about $88,000, but median counterfactual earnings are about $83,000, so that’s only about a $5,000 increase that the median MBA is getting. And once you stack that up against the fact that you have to spend two years out of the labor force to get an MBA, then you have to pay tens of thousands of dollars in tuition usually in order to get that degree, you’re not always going to come out ahead for that. And what we find is that 62% of MBAs and other business related master’s degrees do not pay off, they have negative ROI. So 62% of programs, the median student is going to be worse off for having pursued that MBA. 62% is not a 100% and there’s certainly exceptions, but that is a big red flag for people who are considering an MBA.

Scott:
So another way of saying that and please let me know if this is the right way to think about. Is if I am ambitious and smart enough and hustling hard enough to get into Harvard Business School After my under grad in economics five years later, then I’m going to earn a ton of money whether I go to Harvard Business School or not. And Harvard Business School may only increase my actual earnings potential modestly it’s because of who I am and the counter fact, the reality and the circumstances I’m in, that would enable me to have that option, that that’s what’s going to propel me to those high earnings in the future state, is that how to think how to think about it?

Preston:
Yes. So we need to be thinking about both the person and the degree who’s pursuing one of these advanced degrees. But I’m really glad that you brought up Harvard Business School, because Harvard is the exception that proves the rule. So we actually calculated that for the top 20 MBA degrees, so the degrees from Harvard, from Yale, from Chicago Booth, from Penn Wharton, these MBAs buck the trend. So for most of these schools the top 15, 20 MBA programs, the ROI is going to be above two million, these are some of actually the best master’s degrees that you can possibly get, the problem is that they’re not representative of all MBAs. And so there is this very long right tail of elite master’s degree programs, elite MBAs that are going to get you a lot of earnings, a lot of earnings, but the average MBA is not going to be in that category.
And the reason I hypothesize for this is that in an MBA program, professional connections are very important. It’s all about the networking and less about what you’re actually learning in your coursework. And if you go to one of these elite schools you’re going to be for an MBA program, you’re probably going to be rubbing shoulders of people who work on Wall Street, and people you’re going to have access to in the alumni network that probably is going to be able to get you into a number of very lucrative jobs. So if you’re going to Penn or Harvard or Yale or Chicago for your MBA, you are probably going to do be doing pretty well. But the problem is when we generalize that experience of the top 20 MBA degrees to all 500 MBA programs across the country. At schools where the professional connections are not quite as great is much less likely that the MBA is going to pay off.

Scott:
That’s fascinating.

Mindy:
That is fascinating because that is not in the MBA brochure at all, “Hey, this isn’t going to pan out for you.” I bet the MBA programs that you didn’t just mention are like Preston, “Stop. Stop.” I was going to ask, are there any degrees where it doesn’t matter what program you go through having the MBA or I’m sorry, having the degree is still worthwhile.

Preston:
So the master’s degrees that are going to pay off most often are probably not super surprising, but they include a lot of computer science, engineering, mathematics, nursing, programs that are also pretty good at the undergraduate level. And if you’re getting this master’s degree, that’s probably teaching you skills that are going to enable you to graduate to a promotion or to raise, get you that additional level of skills that’ll enable you to increase your earnings potential. And we find out that most master’s degrees in those fields, computer science, engineering, nursing, they are going to pay off and that’s good news for people who are considering a degree in one of those fields.

Scott:
What are some of the most likely to be negative degrees? We already discussed MBAs outside the top 20, but what are some of the ones that have the worst ROI?

Preston:
So the ones that have the worst ROI are usually in the arts, the humanities, theology fields, which again, I don’t think is terribly surprising. But it tends to be the case that people who pursue say a master of fine arts, MFA, they’re usually not going to get a big enough earnings boost from the MFA in order to justify the cost of graduate school, which is, I think kind of a shame. Because I think people who are majoring in an artistic field as an undergraduate say an art or a music field and then they say, “The earnings associated with this bachelor’s degree just really are not what I hoped for, but maybe if I get a master’s degree that’ll help out help me out some more.” It turns out not to be the case.
The additional earnings that you’re going to get for having gotten that MFA are usually not going to be enough to justify the cost of spending a year or two in an MFA program and spending that time out of the labor force. So if you’re looking to do an MFA in order to increase your earnings potential, I would say you might want to look elsewhere. Now if you’re doing an MFA because you love the idea of learning and you want to get a master’s degree. It’s a free country, you should be allowed to do that, but I don’t want you to have any illusions that you’re going to get a huge financial benefit from this degree.

Dave:
Preston one of the things I loved about your original research that we talked about was that you adjusted for completion rates, and you saw that certain schools that might have a positive ROI for people who actually complete the program, when you look at it in aggregate had a negative ROI because so few students actually graduated. Does the same phenomenon exist with graduate schools or do you see more students actually completing these programs?

Preston:
That’s a great question. So the completion adjustment difference that you alluded to. So at the undergraduate level this basically says, yes, if you get the degree you’re going to get a big bump in earnings from this, but there’s only a 60% chance or so of actually completing. And that’s a big problem because there’s this huge risk that you’ll drop out and you’ll be left with the debt, but none of the benefits of the degree. So this turns out to be less of an issue at the graduate level because completion rates for master’s degrees, professional degrees are already pretty high, they’re north of 80%. Even for very difficult programs like medical school it’s still north of 85% completion rates.
So the completion adjustment, which we do do in this paper just doesn’t tend to make that much of a difference. Now there is one very massive exception and that is PhD programs, which have a much lower completion rate than other graduate degrees. And in that case PhD programs, which are already not that lucrative to begin with, the likelihood that those are going to pay off goes down considerably once you factor in completion rates.

Scott:
One of the things I found surprising with this was the really destruction of value that comes with educational master’s degree. I know a lot of teachers and they all seem or most of them, the vast majority of them seem intent on getting that master’s degree in education. Do you have any thoughts on the phenomenon going on with that particular degree and why that’s so low ROI?

Preston:
Sure. So that was also a bit surprising when we saw that education master’s degrees had fairly low ROI, because most states their salary schedules for public school teachers are going to give you a benefit if you get that master’s degree. That the salary schedule is going to say for somebody with a master’s degree, they’re going to earning more than someone with a bachelor’s degree with a similar amount of experience. But it turns out that going to get an education master’s degree is hard and expensive, and it requires taking time out of your teaching to career to go and pursue that degree. And it turns out that even though there is an earnings benefit associated with a master’s in education, it tends to not be great enough to cancel out the cost of graduate school, which I think is kind of a shame.

Scott:
How do you think about the fact that a lot of master’s, there’s two questions, it’s a two part question, the part that a lot of costs of these degrees are defrayed by the employer. In some cases employers may pay for their employees to go and get these advanced degrees to help aid with retention or development of their people. And then second, if I’m a parent and I have a adult child who’s 25, 27 years old and I pay for their graduate school, how does that change the dynamic there for a lot of these degrees, is it generally worthwhile to do the degree in both of those situations?

Preston:
That’s a great question. So just to clarify the way that we calculate tuition expenses, we take into account aid that’s going to come from the school or from the federal government, if you’re getting veterans benefits or whatever. If you’re getting aid in order to assist you with graduate school, we’re going to take that into account and say only your net tuition is what’s going to factor into the ROI calculation, not the gross tuition before age. But we don’t necessarily have the data to calculate if employers or parents or these other third parties are coming in to help out with your graduate education and to defray tuition costs, so we didn’t calculate it with respect to a zero tuition if your parents are fully paying the bill.
But obviously that’s going to make it a higher probability that the education is going to pay off if that tuition expense is going down. But I would say if you’re a parent and you’re considering “Well, I’ve got some extra money laying around, I’ve had a good career and I want to help my son or daughter better themselves by getting a graduate degree.” You should probably be taking a look about whether that graduate degree is going to pay off or not, because if the increase in earnings associated with that degree is small enough that you’re… If the increase in earnings associated with that degree is too small, then you might be better off just giving your son or daughter that money as cash, which I don’t necessarily think is something that you might want to do as a parent, that might kind of go against the parent code just to write your son or daughter a big check.
But if your goal is financial security for your son or daughter, then often just taking that money as cash is going to be a better investment than getting a graduate degree, depending on which graduate breed is, of course.

Scott:
I’m going all over the place with these questions here.

Preston:
No worries.

Scott:
Another thing that I’m seeing here is that in your top 25, you’ve got basically law and dentistry as the two most likely to pay off things there. And what I notice about the law degrees is that these law degrees are all coming from elite Ivy league institutions for the most part. There’s a couple of exceptions in there, but you’re seeing familiar names like Pennsylvania, Harvard, Stanford, those kind of law programs. And then for the dentistry programs you’re seeing all over the place, it looks like there may be a more cost focus there that’s leading to the extreme ROI, like West Virginia and Eastern Carolina and those types of things, any thoughts on the law or dentistry professions?

Preston:
That’s a great point so law, dentistry, medicine, these are the professional degrees that are really the gold standard for financial value at higher education. Over 90% of law medical dentistry degrees are going to pay off and often pay off in spades over… almost 50% of medical and dentistry degrees are going to have an ROI of over one million. And as you mentioned the very top of the list, the degrees that are going to have the hugest, hugest payoff talking millions of dollars over the course of your career are all in law and dentistry fields. And I think you brought up a very interesting nugget of information from that list, which is that if you look at the list of the top law programs, we’re all talking about extremely prestigious schools Columbia, Harvard Law, Yale Law, places that produce Supreme Court justices and so forth.
But if you look at the dentistry schools I think the top one is from the University of Colorado, which is still a great school, of course, but it usually doesn’t make the top of the US news and world report ranking. And I think that signals something about why these degrees are valuable, that with law degrees it might more be about who you know and what kind of professional connections you’re making at the school, what kind of summer work, summer internship opportunities are available to you, and what are the jobs that you’re going to get out of school that will enable you to have a great and very lucrative career. It’s more about the connections than about what you learn.
I think with dentistry it might be the opposite, that there are some dentistry schools that are just going to do much better than others, that are teaching you the skills you need to fix teeth. The list of schools that are teaching you the best is not always going to align with top US news and world report ranked universities. And it might be in dentistry at least much more about the skills that you’re learning than about the professional connections that you’re making.

Dave:
We always have very good dentists here in Colorado and can definitely recommend some. But Preston I had a question for you, so I got a master’s degree and deliberately chose to continue to work while I did that. And that was difficult, but it was based on this opportunity cost. So I’m curious, have you looked at the data for these so called executive programs where they’re made for working professionals and how that would impact the ROI of a master’s degree?

Preston:
That’s a good question, so were you pursuing your master’s degree full-time while you were working, were you doing both full-time work and full-time school?

Dave:
Yes. And I was self-managing seven rental units at the same time, it was a very bad decision. Very bad decision.

Preston:
Wow.

Dave:
But it wasn’t full-time, basically, I took two classes at a time, so I think that’s probably less than a full workload, and then you did it basically full year round, no breaks, so 24 months straight two classes at a time.

Preston:
I see, so this is a great question. So for the sake of simplicity, all of the ROI estimates that are reported in this paper are based on a full-time enrollment and not working while you’re enrolled, but there are many different paths to higher education, and we definitely want to be cognizant of those other ones. So let’s think about what would happen if you decided to enroll part-time and also work part-time while you’re pursuing your degree, so that you can have a little bit of extra earnings while you’re pursuing it. That’s what I’m doing, when I’m pursuing my PhD I’m also working part-time. And so what happens is that you definitely don’t lose out on as much of the opportunity cost of not working, because you are working some of the time.
But if that working part of the time means that you have to extend out your graduate program, so instead of to your program becomes three or four years, because you can’t take as many classes at once. You have to extend it out for more years, you are going to be saving money by not spending time out of the labor force, but you’re also going to have fewer years in your career to enjoy the benefits of the higher earnings associated with the degree. So if it takes you four years to get your MBA rather than two, then you have two fewer years to enjoy the higher earnings associated with that MBA. Hopefully, that those higher earnings will materialize that you’re in a good program, but that is definitely something to consider, the opportunity cost of not working, but there’s also the delay cost of delaying getting that degree for several years, which can in those costs can also add up.

Dave:
Preston, you have thought of everything. Every question I think that maybe you haven’t thought of it, you’ve thought of every single thing.

Mindy:
Do most people quit their job to go back to their master’s program? Or do most people tend to do the working through, I thought people worked through their master’s program, my dad did. I think he has an MBA, I can’t really remember what his degree is. I just remember there was a time that I was going to college graduations left and right.

Preston:
That’s a good question. I don’t have the statistical breakdown in front of me, as I said just for the sake of simplicity we assume that full-time work and not working while you’re enrolled. And if your educational pathway is going to be different than that, the ROI estimates I think are still going to be useful because most of ROI is going to be based on what you’re earning. But you should be thinking about how is this going to deviate from that norm. Am I going to be gaining some by not spending as much time out of the labor force, but also am I going to be losing some by having fewer years available in order to enjoy the higher earnings associated with my graduate degree?

Scott:
Does the timing of the degree make any difference in the sense that if I get the degree immediately following college and then go into the workforce, does that change things, or is it better to wait and do it five, six years down the road after I’ve had some professional experience?

Preston:
That’s a very good question, so what we did in this analysis is basically we looked up what is the median age of graduation for each different graduate degree? And it turns out that this really differs for different degrees. So law and medical programs, it’s pretty typical for students to go into those programs right out of college, or at least one or two years out of college. So they’re probably going to be getting those degrees in their mid to late 20s. For MBA programs, it turns out that most of the median age of graduation for those is around 30. So people will be working out in the workforce for a few years, and then they’ll be going back to school in order to get their MBA. So everything is basically calculated based on the median age of graduation, so for an MBA program median age of graduation is 30. You have from the age of 30 through the rest of your career to enjoy those higher earnings benefits, for a medical degree median age of graduation I think is around 26.
So you have from age 26 until the end of your career to enjoy those higher earnings benefits. But also that is something to think about when we’re talking about what is actually going to be the value of graduate school, because it matters when you decide to pursue those degrees. And so if you decide to pursue your degree earlier on in your career, you’re going to have more years to enjoy the higher earnings benefits associated with that degree. It also might be the case that if you’re enrolling at the age of 23 or 24, you don’t have as much experience. So the opportunity cost of not working for a couple years is going to be lower because a 23 year old is going to earn less than a 28 year old, most of the time. So it tends to be the case that from a purely financial perspective, pursuing the degree earlier is going to be better, but that doesn’t necessarily mean that you absolutely should pursue the degree earlier because it’s important also to take some time in your career to figure out, “Well, what is it that I really want to do?”
And if you get the MBA at 23 and then you decide at 25, “I really hate business. I really don’t like doing this.” That’s not a great situation for you to be in. So while I would say that from a very narrow financial perspective, yes, it is going to be better to get that degree earlier, that doesn’t mean you should always pursue it earlier because it is important to be sure that this degree is what you want, that this degree is what is going to help you advance your career before you take the plunge and decide to enroll in graduate school.

Mindy:
Your average age of graduation seems to correlate with the requirements of the advanced degree to be able to work into that field as well. Like law and dentistry you can’t just go start drilling on people’s teeth until you have the advanced degree, I’m assuming you can’t be a dentist as a bachelor degree.

Preston:
Yeah. That’s right. So if you want to work in medicine or dentistry, you are going to have to get that advanced degree if you want to practice in those fields. And that’s actually, I think one of the major reasons why these degrees are so lucrative. Why medical degrees and law degrees and dentistry degrees are going to pay off so well, it’s because the requirements to practice in one of these fields are so, so strict. You have to have this advanced degree, so that’s a really high barrier to entry in those professions. And that means if you have a really high barrier to entry, you’re going to have a really constricted supply of doctors and lawyer. And so the wages that those doctors and lawyers are going to get are going to be really, really, really high. And so that’s great for the doctors and lawyers, but if we ask the question of, well, what does this mean for our society or what does this mean for the cost of healthcare or legal services, maybe that’s not such a great thing.
Maybe having these high walls around these professions are not necessarily a great thing for our society, if it’s going to increase the cost of medical and legal services. And I do note in my paper that these really high returns associated with law and medical degrees are a signal that we should be lowering the walls, that we should be creating more pathways for students to become lawyers and doctors and dentists, because high wages for any profession are a signal that we need more people in this profession, we need more doctors, we need more dentists.
The population is aging, demand for healthcare is going up, we need more doctors. And so when you were thinking about these really high wages associated with these professions, it’s not only important for students to say, “Well, if I want to really make bank, I should be a doctor.” But it’s also important for policy makers to say, this is a big unmet need in our society and we should be creating avenues for more people to enter the medical profession, because that is what the economy is telling us.

Scott:
One thing we talk talked about last time was a major factor in the ROI analysis is going to be the discount rate you use, and I think you said you used a 5% discount rate last time, did you use the same one for this study?

Preston:
That’s right. Yes. So it’s a 3% real discount rate, and then assuming 2% inflation, which is probably an assumption that’s not so great anymore, if you see the recent CPI print had inflation at 8.5% this morning, so that’s not great news. But basically 3% real discount rate after adjusting for inflation.

Scott:
Okay. For those who maybe don’t understand the term discount rate, it’s discounting future earnings as less valuable than they are today, because you could be investing those dollars in an alternative asset like the stock market or real estate. So you have to make an assumption there and Preston has chosen a 5% discount rate, which is perfectly reasonable. You could say if you think you’re going to invest those dollars in real estate and earn a 10 or 15%, the ROI for these degrees would be that much lower because your alternative investment and what you believe you could get would be that much higher in the alternatives with that. If my goal is financial independence at an early age, 30s, 40s, 50s, what should I take away from this study? How does that change the game from an ROI standpoint for these graduate degrees? Does it eliminate most of them?

Preston:
So if your goal is financial security by the age of 30 or 40, I think the main takeaway is that your field of study really matters, and that different careers are going to pay vastly different amounts. And it’s no act accident that happens because some jobs, some fields are just going to be more in demand than others, which is the reality of our economy. A computer scientist is going to be more in demand than an artist. That doesn’t mean that artists are useless or anything like that, I don’t want to be construed as saying that, but it does mean that there are differences in a demand for these various professions. And if your goal is financial security, that is something that you should absolutely be taking into account.
So when you’re deciding how to plot out your career journey in order to gain that financial security, first place you should probably start is, “Well, what it is my undergraduate graduate education going to look like?” Because that is going to make a huge difference to your future financial success as well. Choosing to major in computer science, engineering, economics at the undergraduate level business is a very good degree that tends to pay off or nursing that’s going to do you pretty well. And then looking at the graduate side what fields of study you’re going to pay off. Getting an advanced degree in computer science or engineering, that’s probably going to be good, that’s probably going to help you become financially secure, not always. If you get the MBA, at least not from one of the top 20 schools, that’s probably not going to not going to help with financial security, but it really matters what you’re going to choose as your field of study.
And I also want to bring up really quickly since we’re talking about this, the student debt issue. Student debt at the graduate level is going to be way higher than it is at the undergraduate level. If you read op-eds in New York Times or wherever about people talking about how they have over a $100,000 of student debt, that is almost always somebody who went to graduate school. Because loans for undergraduate students are very strictly capped at least by the federal government, but for graduate students they’re completely unlimited. And that means you’re going to have more options to finance your graduate education, but you can also get yourself into much deeper debt.
And so that’s why especially at the graduate level, it turns out to be very important that you should be considering is this graduate degree going to pay off and is it going to enable me to pay off my debt? And it often is, I don’t want to say student debt is always going to be a horrible decision, because if you take on $150,000 to get a medical degree, you’re probably going to be okay. But if you take on $150,000 to get a degree in the arts that’s much less likely that that is going to be a sound financial decision.

Scott:
Yeah. And let me rephrase the goal that I’m trying to convey here. Financial stability is one thing, but let’s say it’s a race to 1.5 million in net worth at the earliest possible age and I’m trying to back in mathematically to that, just in whatever format, stocks, real estate, whatever, cash. And I’m looking at these degrees, one of the things I’m thinking, actually this is creating a new question in my mind as I’m thinking this through, if I’m going to get a law degree… If I want to be worth $1.5 million, it’s better to earn a $100,000 each year for 15 years than to earn nothing for five years and then 250 or $300,000 per year in the final years backing into that, because I’m going to have a big tax burden.
I’m going to be a much higher tax bracket with that advanced degree in those prime earning years than I would, if I had spread that out over that journey, without that degree, for example. Was that at all factored into your analysis, the kind of the relative tax brackets that these… and the amount of actual net worth that one could theoretically accumulate if they went through these programs at different intervals.

Preston:
That is a great question, so all of the earnings that we took into account in this analysis are going to be pretax just for the sake of simplicity, but you do bring up a great point that it’s important for students to consider, “What is my tax bracket going to look like later on in life?” And I think it is strange that from a tax perspective, if you make $2 million over the course of your life, you’re going to be taxed much more if those 2 million are concentrated in some very high earning years at the end of your life, rather than spread out over many years, which is a strange quirk of the income tax system that I think is probably going to be inherent to any income tax system. But you’re absolutely right, that that is something that students should be considering.

Scott:
Yeah. And if I’m going to get a medical degree, I’m going to be paying no tax for eight to 10 years and I’m going to be paying a tremendous amount of tax for that. And so that break even point from a true net worth contribution is going to get kicked out just a few years from what I would see in that, in your study, which is a layer of complexity that doesn’t sound very reasonable to add in. But just something for some potential graduate folks considering this degree, to think about as something going on in the background that is going to be impacting the ROI after tax of some of these degrees.

Preston:
Absolutely. That’s something very important to consider, unfortunately, we didn’t incorporate that layer into the analysis, but yes, if you’re listening, that is something you should absolutely be thinking about.

Scott:
Awesome.

Mindy:
So I think the ideal listener for this episode is somebody who has not yet gone to college. It doesn’t really do me much good to look at your degrees and your research and be like, “Oh, look at that I really messed up by going to college.” Like, “Oh, well, I shouldn’t have done this if I could go back in the way back machine, I shouldn’t have gone to college that would’ve been a better choice.” But going forward I like Scott’s question and I like that you brought up college debt and student loan debt. And that made me think about an episode that we recorded a thousand years ago, it released on episode 199 with Debt Ascent.
And his blog is called Debt Ascent because they were in $520,000 worth of student loan debt because his wife is a dentist and she had the majority of it. He’s an engineer, she’s a dentist and the majority of their student loan debt was her dental school and dental school is not sheep at all. I just think it’s really interesting now they’re making a combined 400,000 plus per year, and they were able to pay off that debt and have an additional $5,000 in net worth. Your top advanced degree is the dental degree from the University of Colorado, the ROI on that is $10, 800,000.

Dave:
Wow.

Mindy:
Which makes that $500,000 in student loan debt seem rather paltry.

Preston:
Yes.

Scott:
Hey, dental school’s a bargain.

Mindy:
Everybody go be a dentist.

Dave:
Sometimes when I’m sitting at the dentist, I’m like, “Who the hell would want be a dentist?” No one wants to be there all day and it’s just like doesn’t seem that fun, but now I understand why people want-

Mindy:
Yeah, no, every time I’m at the dentist, I think this because it’s not just people with nice teeth that you get to work on. You have to work on people who are like, “I haven’t been to the dentist in 47 years.” And you’re like, “Okay.” Can you be discriminatory as a dentist to just say, “I only want people who brush every day and floss.

Scott:
I don’t think those are the folks that are going to get the return of $10 million on their dental degree. Well, one other question I had here and is similar to medical degrees was I know a number of veterinarians. And I’ve heard from these veterinarians that veterinary school is one of the worst ROIs in the entire ecosystem of these types of degrees, because the programs are as intensive as a dental or medical degree in many cases and require similar amounts of student loan debt, but the income potential is very low. Did you do any work with the veterinarian degrees in these studies?

Preston:
Yes. So we didn’t break that out specifically, but I could look up veterinarian medicine in our table here, which you can look up if you go to roi.freopp.org, you’ll be able to see that there’s a page there where you can look up the ROI of basically any degree in the country. So let’s see the financial value of a veterinary degree, the top one is from Ohio State University, which has an ROI of almost 2.5 million. Tuskegee University, Texas A&M University, University of Florida, Oklahoma State University, these all have veterinary programs with ROI above 1.5 billion. But if I scroll down towards the end of this, there are also some veterinary science, veterinary medicine programs that do not have great ROI.
There are none that are outright negative, but there are some that are in the $300,000, 400,000 range, which is something that you might more associate with a bachelor’s degree, rather than this supposedly very lucrative professional degree. I think my answer would be if you’re considering being a veterinarian as a career, that there’s a lot of variation depending on which school to school you go to. And if you’re curious to learn more, we have all the calculations there where you can look them up and find the best school that will suit your needs.

Scott:
Awesome. I’ve been operating under the bias that that’s one of the worst ROI degrees, and now we can actually look at the data and see that’s not correct, so thank you,.

Mindy:
What was that website again ROI what?

Preston:
roi.freop.org. So roi. F-R-E-O-P-P .org. And so that will take you to a page where you can look at the ROI associated with colleges, graduate schools, or community colleges. If you scroll down and if you look at where it says, “We calculated return on investment for 14,000 graduate degrees, find yours,” that’ll take you to a searchable table where you can put in any field of study or any university, and you can see our estimates of ROI associated with each of those degrees.

Scott:
So I want to ask a question here, a little tongue in cheek. You’ve now produced the most comprehensive analysis on ROI for undergraduate and advanced degrees, probably in the world at this point and what else do you have to do to get a PhD? How hard is a PhD, if you’re still in your program here?

Mindy:
And are you using this as your PhD thesis?

Preston:
I wish I could, it’s surprising, but analysis like this if there’s no fancy econometric technique in there that it’s hard to get published in journals, so they don’t always accept that as a PhD dissertation. That’s why I think it’s important, I think this segues into a nice point where it’s much more important to think about what you want your career to be than what you wants your school to be. School should be a means to an end, a means to a happy life and I think a happy life begins with a very fulfilling career. And I found that doing this research on higher education, helping people make better decisions about college and graduate school is a very fulfilling use of my time. And I think that the PhD that I’m doing has helped me along the road to that, but it’s definitely not the be all or end all of my life. But I’m very happy in the career that I’ve been able to choose and regardless of whether I can put this into my dissertation or not, I’m happy that it’s out there.

Scott:
I don’t know what the other PhD candidates are putting out, but this seems useful to me.

Mindy:
This should be required reading for anybody who is going into college.

Preston:
Yes.

Mindy:
Both of these studies.

Preston:
And I also just want to bring up the point that when I started my PhD program, I fell back on the same assumption that I think a lot do people do that higher degrees, more education is always going to lead to higher earnings. And then I did the calculations from my PhD program and it turned out to be negative, not outrageously negative, but it turned out to be negative, and I think the reason for that is that it’s strong mostly economists, people who have other opportunities that might be fairly lucrative if they didn’t go onto the PhD. But yes, it turned out to be not necessarily a great financial investment. I have a life philosophy of not having regrets, so I don’t regret doing it. But I think that if I’d had this information three years ago, when I started my PhD program, I might have made in a different decision, and so I hope that this research will also influence other people’s decisions later on.

Scott:
I think it’s also important to point out that the degree will vary by individual, there’s going to be variation within these degrees and I will be surprised if… Your PhD is not economics, right?

Preston:
That’s right.

Scott:
I’ll be surprised if the work that you’re doing and the passion and the thoroughness with which you do it, having a doctoral in economics will actually serve you Preston very well over the course of your career, because this is stuff that can impact policy in people’s lives at the highest level. And having that credential behind you will make it even that much more impressive or more valuable to folks as I’m sure you update this and maintain the database over time.

Dave:
Preston, I’m sure you’re going to drag up the average for your entire PhD program, it’s probably going to be profitable by the time you’re done. You’re starting to use the mean instead of the median and you’ll have it in no time.

Scott:
Well, actually that’s a great point, are some of these degrees inflated by… like Harvard MBA is that inflated by the guy who goes out and starts Facebook? I know he was a dropout, but how much are some of these degrees inflated by outliers that are impacting the data to some degree?

Preston:
Yeah. So fortunately the data that the education department makes available that we used to do this study, that is based on the median of graduate earnings, not the mean. So fortunately the earnings estimates are not going to be dragged up by one crazy outlier. I remember somebody told a story about their geography program at I think it was North Carolina State or University of North Carolina, one of them. And the earnings for the geography program were the highest in of any major because they were using means and Michael Jordan had been a geography major. So that’s why it’s important to use medians instead of means, but also why it’s important to consider the individual not necessarily the program. And while median earnings for each program can be an important guide to what you think you might earn later on, it is still important to remember that you’re still an individual and the median is not necessarily the destiny for your career.

Scott:
That’s an awesome story. I love that. Michael Jordan geology major.

Preston:
Yeah.

Scott:
Awesome. Well, is there anything else that we should be asking you or any other thoughts that we should explore here for this study?

Preston:
Yeah. So one other thing I wanted to mention about our study is after we produced the estimates for undergraduate ROI, a lot of people wrote to me and said, “Well, why the heck are biology degrees so low?” It turned out that biology, which is supposedly a hard science 35% of degrees were negative and that seemed kind of surprising. And the reason there is that people will usually use a biology degree as a stepping stone towards a medical degree. And so once you put the ROI of a biology undergraduate degree and a medical graduate degree together, it turns out the ROI for that is close to 1 million, so that’s a pretty good investment overall. But if you get the biology degree and then you don’t go on to a lucrative graduate degree, the chance that educational pathway is going to pay off is a lot lower.
And so to address this question that many people had, we also produce estimates for the lifetime learning ROI of very popular combinations of bachelor’s degrees and graduate degrees, biology and medicine is one example. But you also have combinations like say political science and law, political science is a degree that does not always pay off at the undergraduate level, but if you combine it with a law degree then it’s going to pay off about so $750,000 over your career on average, so it turns out to be much better. So that’s that table if you look at the full paper and scroll down a bit, you can see that table where we have lifetime learning ROI estimates for popular combinations of bachelor’s student graduate degrees. And if you as a student or you have a child who is considering an advanced degree at some point, that can be useful. An undergraduate degree that might not necessarily pay off in its own, might be actually kind of lucrative when it’s combined with the right graduate degree.

Scott:
So that brings the $10 million question here, what is the best combination for a aspiring dentist?

Preston:
For an aspiring dentist? So I think it’s going to be that biology degree again. So the data we use to calculate what are the most popular combinations of undergrad and grad degrees, unfortunately, did not distinguish between medical degrees and dentistry degrees, it kind of lumped them all into one category. I don’t Know why they clearly didn’t consult doctors or dentists when they were doing that data, but that’s the data we have, so that’s the data we use. So that $900,000 average, which is the average for biology plus medical graduate degree, that’s going to be our estimate for both medical and dentistry degrees.

Scott:
Awesome. Well, I’m glad we asked about another question there, we would’ve missed that really important linkage between undergraduate and graduate and the combination, that’s impactful there, so thank you for saving us there Preston.

Preston:
Of course.

Scott:
Are there other areas that we should be exploring here as well beyond that?

Preston:
Yeah, well, I think I would reiterate that field of study is really important when we’re talking about master’s degrees and advanced degrees, and that some fields of study are going to pay off much greater than others. But I also kind of want to link back this whole analysis to what we’re seeing going on in the news right now. So there’s a big story about how college enrollment is dropping, fewer people are going to college I think that’s because of the hot labor market right now. Getting a job looks like a better proposition not necessarily than going to a school for four years. But the one place where we’re seeing that trend reversing itself is that the graduate degree level.
That enrollments and master’s degree programs have shot through the roof in the last two years. And that is a bit concerning from the standpoint of this research, because the research shows that 40% of master’s degrees do not pay off on average. And so if we’re seeing this big increase in people going to graduate school for a master’s degree, that a lot of people may be disappointed especially if they’re taking on debt to get a master’s degree, and then not necessarily getting the earnings benefits associated with that.

Scott:
But you can see rationality with that decision because COVID happens, I’m laid off, the economy is not doing great, I don’t have any counterfactual earnings in those first six months or year of COVID. So the decision there seems more it’s a logical decision to then enroll in grad school, no one I don’t think could have predicted, hey, everything’s going to bounce back so hard in 2021 and in early 2022 here from an economy standpoint and availability of jobs. I think you’re right to be concerned about that whether a lot of those degrees will in fact pay off, but it doesn’t mean that a lot of these folks made a bad decision at the time and that’s a perfectly logical thing.

Preston:
Yeah. That’s a great point. And I think it gets back to the issue of what are the various opportunity costs? What are the various options available to you? And if you get laid off from your job, graduate school or college can seem like a pathway to increase your financial security. I just worry about when people assume that degree is going to guarantee you financial security for life, because the evidence shows that that’s not necessarily going to happen all the time. And when the default assumption becomes if I’m experiencing tough economic times, the definite answer must be to get another degree, I think people will often be disappointed with that decision.

Scott:
Now let’s go back to the undergraduate degree, you said enrollment’s beginning to drop a little bit, is that a volume and a rate component, like there are just less high school seniors right now, so enrollments dropping, or is it a lower percentage of high school seniors are enrolling in college?

Preston:
It’s both, so enrollments are dropping in both absolute and relative terms. So we have a lower percentage of high school seniors enrolling in college. And we also have a college enrollments dropping in absolute terms, there are just fewer numbers of students on campus. And we also see adult learners, people who do not necessarily graduate from college just a couple months ago, excuse me, graduate from high school a couple months ago, but people who might want to go back to college for another degree later on in their lives, though their enrollments are also dropping. But that’s all confined to the undergraduate level, again, at the graduate level those trends are reversing themselves.

Scott:
So I’m about to make a bet assuming that my wife and I start a family in the next year or two, and it’s going to be a very expensive bet if I’m wrong on this. But I believe that college education is going to be much less expensive in real dollars, maybe not inflation adjusted, maybe may not nominal dollars after inflation in 15, 20 years, when any future children I have will go to college. And I believe that for a number of reasons, partially I think the research like yours will prove out majors that are not economical and demand will shrink for those as will cost. I think that college education is being really inflated by the availability. The cost of college education is being inflated by the availability of debt, which now anyone can go and get a degree from college with a lifetime loan essentially on that.
And I think that is going to change either that debt will get forgiven, or it will become less available over the next couple of decades, either way that will lead to a reduction in future accessibility of college debt, in my opinion, for many students downstream. And that combination less debt and more understanding of the ROI of these degrees, I think will lead to lower costs for college in general. And so this is a 20 year outlook, I can’t possibly know if I’ll be right or not, but I’m choosing not to… I will almost certainly choose not to put money into a 529 plan or similar college dedicated savings program, and instead build wealth in a general sense to give optionality if future children do in fact decide to go to college for that. Do you have any long term predictions for this industry or thoughts like that or would you challenge mine?

Preston:
Sure. Well, let’s start with the short term predictions and then build out from there to the long term predictions. So 2021 was the first year, basically in three decades that college tuition actually dropped in real terms. So for the last three decades, since basically the late 1980s, college tuition has risen above the range of inflation year, after year, after year, after year, after year. If you have children in high school I’m sure this is not going to be news to you. But in 2021, that trend reversed itself and tuition actually dropped in real terms. Part of that was higher inflation, but part of that was also that colleges were actually cutting their tuitions. And I think a big reason for that is what you alluded to that demand for higher education was dropping and colleges realized, “Wait a minute, we can’t just keep raising tuition year after year, if students are not going to our schools anymore, we’re going to need to cut tuition in order to lure them back.”
So how does this extrapolate out to the longer term? I think that a big factor right now in today’s reduction in tuition is the very strong labor market, that might not continue forever. I certainly hope that it does, strong labor markets make all sorts of wonderful things happen in the economy. So I hope that we continue to have a strong labor market, but that might not be the case forever. If we have another recession, we might see that trend reverse itself and college enrollment start to rise again. But as to what is this going to look like 15 or 20 years from now? I think that the knowledge as you alluded to definitely is settling in among students that college is not always a golden ticket, that it depends just as much as what kind of degree am I get as opposed to am I getting a degree, and that different degrees are going to be worth vastly different amounts in terms of their financial value.
I think that that realization is going to drive students to be a little bit more discerning, a little bit more considering about whether they decide to pursue a college education. I certainly hope so. And that might exert a moderated influence on tuition prices if there’s no longer this belief that college is always going to be a golden ticket. I certainly hope that’s going to be the case, that’s the optimistic case, which I think you also laid out, but I may be proven wrong so we’ll see.

Scott:
Do you have any thoughts on federal student loan debt and how that may be impacting prices as well?

Preston:
Yes. So I do worry that if there is a large scale cancellation of student loan debt, colleges might take that as a signal to start raising their prices again. And so the reason is that if the government cancels student loan debt, I don’t think credibly say that we’re only going to cancel student loan debt once. Because we are still issuing almost a 100$ billion in new federal student loans every single year. And if we continue with business as usual, even if we cancel debt, student debt is going to be back up to 1.6 trillion in the matter of a decade, just a little more than a decade. And so what kind of expectations is this going to create for students and colleges? If the government cancels student debt then colleges can credibly whisper into student’s ears, “It’s okay if you take out some more debt, because the government’s probably going to forgive it for forgive it later on.”
And so I do worry about the moral hazard effect that this creates if we have a cancellation of debt, but we don’t necessarily have any restrictions on new lending, if we just continue with the student loan program business as usual. Colleges might take that as a signal that it’s okay to raise prices because taxpayers eventually going to pay for it.

Scott:
Yeah. Well, that’s where I’m thinking and now we’re getting in the realm of politics, I don’t want to go too far down this road. But you wonder if you cancel student loan debt, if there’s a forced cancellation of future issuing of student loan debt or heavy restrictions that are placed on it. And so that’s what I think is going to happen over the next decade or two is either there’ll be a cancellation event and then corresponding restrictions on future issuing of student loan debt, that’ll make it much harder to get loans for unprofitable degrees in particular.
Or there will just be more restrictions on getting student loan debt for unprofitable degrees without that cancellation event. So I just think one of those two combinations to me seems inevitable to some degree. I don’t know if you agree, but that’s influencing my thinking on saving for potential future college.

Preston:
Yes. So I think there is bipartisan recognition in Congress that the student loans program does need to be reigned in somewhat, that we are funding a lot of degrees of questionable value, and we’re not sure whether taxpayers should actually be writing a blank check for these degrees. And so I think that both parties have proposed in recent years comprehensive overhauls of the higher education act, that’s the main federal law that governs federal support for higher education. Comprehensive overhauls that do include some restrictions on new lending, which is mainly going to take the form of if you’re operating a program that has a loan repayment rate that’s too low, if students are not earning enough to pay back their debts then the government’s going to turn off the spigot to that program.
You say these outcomes are clearly not on par with what we expect from a federally funded program, so we’re going to turn off the spigot you can’t get any more money from the federal government. Those bills have so far gone nowhere, because I think that the Republican and democratic parties are very far apart on other aspects of higher education policy, that have made it very difficult for a compromise on accountability for federally funded programs to actually get over the finish line. So I certainly hope that there’s going to be some accountability, some restrictions on new lending for programs of questionable value, but the politics of it might just make that impossible.

Scott:
You’re phenomenal. This was a great discussion and you thought of everything as Dave mentioned earlier. This has been a really fun discussion and I’ve learned a tremendous amount here. Dave, do you have anything else to ask here?

Dave:
No, this was great. Thank you so much Preston, as usual very enlightening conversation.

Preston:
Thank you. I appreciate the opportunity to come on and just nerd out with you all. I’m sorry I interrupted Mindy. Go ahead.

Mindy:
No, I was going to say are you coming back on again, what’s your next topic of research?

Preston:
So our next topic of research is basically looking into how this ROI data can be used to affect public policy. So as I mentioned there is bipartisan interest in an accountability system for institutions of higher education that are receiving federal funding. And I think that ROI can be a good metric to judge programs on whether they’re providing value to students. And for the government to say if we’re going to be funding these programs, what kind of ROI should we be expecting? How much leeway do we want to give them. So that’s the next avenue of research is using the data we’ve created that’s part of this ROI project to say, what are the lessons for public policy.

Mindy:
Awesome. I’m excited. I hope that your research has some impact because it is absurd that some of these programs continue to be funded. Or it’s absurd that students can continue to take out massive student loans on some of these programs, which are absurd to begin with.

Preston:
I certainly agree.

Mindy:
Preston this was so much fun, I love talking to you all the time. When you do a real estate one let us know because Dave can prick your brain on real estate, any topic he’s got you covered.

Preston:
All right. I’ll keep that in mind. Thank you again for inviting me back on.

Mindy:
Oh, thank you so much for doing the research because this is fascinating, but I don’t want to work, I just want to talk to you. Okay. Preston, we’ll talk to you soon.

Preston:
Talk to you soon. Take care.

Mindy:
Okay. That was the impressive Preston Cooper. I love him so much. Like Dave said in the intro I hope he doesn’t think that we’re fonding over him too much and get uncomfortable. But wow he’s so impressive, his big brain, taking all that information, he thought of everything.

Dave:
Was that fanboying too hard.

Scott:
I think we all were, so hopefully he comes back.

Mindy:
Of course, he’ll come back. I love him. He will come back. He reached out to me. He’s like, “Hey, I finished my research.” I’m like, “Great. When can we get you on?” I’m super excited to have him on the show because I think it’s really, really important to have this information. Now he is also getting a higher level degree and he said, “My degree turns out to have a negative ROI. Maybe I would’ve made a different decision. Maybe not. It would’ve been nice to have this information but I didn’t at the time, so I made the best choice with the information that I have.”
Anybody who is listening now who has people in their life who are thinking about going to college, need to listen to episode 251, if they have not yet gone through their undergrad program. And they need to listen to this episode and encourage their college age family to listen to this as well, because it’s so important. Sometimes the school that you choose is important more than what you’re studying. And sometimes what you’re studying is really important and if you don’t know what to study, maybe going to college isn’t the right choice at this time.

Scott:
I think it’s really extremely valuable work. I think he is in my opinion a thought leader in this space, for sure at this point with his exhaustive data set. He’s able to translate the story that these numbers are telling and the exceptions and logically think through all of these different paths, and has a genuine enthusiasm for understanding the truth of what’s going on in terms of college ROI, and is creating a really valuable product for individuals. And I hope that he has a chance to have his voice heard at the policy level, this is the kind of person that we need influencing those policy decisions. He has really thoughtful ideas on how to make things better for society with his research, so really impressive guy. I can’t wait to see what comes next in his career and what other pieces of thought leadership he’ll produce over time.

Dave:
Absolutely. I just think it’s super helpful to think about what… If you’re listening to the show and planning your financial future and thinking about maybe investing in real estate or investing in the stock market. I really like the part where we were talking about when you make money and if you should go to school quickly, because if you think about the time value of money you’re investing for long term, it really does matter when you go to your graduate program, when you earn that money, Scott you asked a great question about taxes. Well, Preston has provided a really valuable data set for people. It’s not just so cut and dry where you can say, “This will be good for me or not good for me.” If you’re planning to invest and to be an active investor, you can come up with creative ways to make your graduate degree or college supplement your investing career and supplement your investing ambitions, it doesn’t have to be one way or another.

Scott:
Love it. Well, Mindy, Dave, should we get out of here?

Mindy:
Yes we should. We threw out a lot of links today, they can all be found at biggerpockets.com/moneyshow293. From episode 293 of the BiggerPockets Money Show, that first guy is Dave Meyer and if you like this episode you will love his new podcast On The Market, available wherever you get your podcast. The other guy is Scott Trench, you already know him and I am Mindy Jensen saying chop chop lollipop.