Paul L. Caron
Dean





Monday, March 7, 2022

'Law School Is Usually A Good Bet: 93% Have Positive Returns, 24% Have ROI > $1 Million'

The Foundation for Research on Equal Opportunity, Is Graduate School Worth It? A Comprehensive Return on Investment Analysis:

This report presents estimates of return on investment (ROI) for nearly 14,000 graduate degree programs, including 11,600 master’s degrees and 2,300 doctoral and professional degrees.

In financial markets, ROI measures the profitability of an investment relative to its cost. In our study, we define the ROI of a graduate degree as the increase in lifetime earnings a student can expect from that degree, minus the direct and indirect costs of attending graduate school.

I estimate that the median master’s degree increases lifetime earnings by $83,000, after subtracting the costs of graduate school. However, there is enormous variation by program. Master’s degrees in engineering, computer science, and nursing virtually guarantee their graduates a financial return. But programs in the arts and humanities rarely pay off at all. Overall, 40 percent of master’s degrees fail to produce a positive return.

Doctoral and professional degrees tend to perform better. The majority of professional degrees in law and medicine generate a lifetime financial return exceeding $500,000. Overall, 86 percent of advanced degrees have positive ROI. The exceptions are PhD programs in education and other non-STEM fields.

FREOPP 1

Most — but not all — advanced degrees pay off. Among the 2,300 doctoral and professional degrees with data in the Scorecard, the median program yields an impressive ROI of $513,000. Just 14 percent of advanced degrees have negative ROI.

Law and medicine offer the most lucrative returns. Almost half of medical degrees (broadly defined, to include medicine, dentistry, pharmacy, and equivalently advanced credentials), yield a payoff of more than $1 million. Other advanced health care degrees, such as doctorates in physical therapy, also have near-universal positive returns. Law school, despite its hefty price tag and three-year commitment, is usually a good bet: 93 percent of law programs have positive returns and 24 percent have an ROI above $1 million.

Supply constraints are one potential reason for the high returns associated with professional degrees. Medical schools have notoriously low acceptance rates, and the number of new medical degrees conferred has failed to keep up with population growth. Law degree conferrals have fallen in absolute terms. High ROI associated with these degrees, combined with a paucity of degree conferrals, suggests that there is unmet market demand for people with these skills. This pushes up salaries for doctors and lawyers, but at an economic cost.

The top 25 advanced degrees by ROI are all in law or dentistry. ... The highest-ROI law degree is Columbia University’s, which offers an estimated payoff of $6.4 million.

Rank

Law School

ROI

3

Columbia

$6,417,207

4

Penn

$6,345,375

5

Northwestern

$6,078,881

6

NYU

$6,018,642

7

Virginia

$6,015,655

8

Chicago

$5,993,689

9

Harvard

$5,763,002

10

Stanford

$5,330,190

11

UC-Berkeley

$4,568,942

13

Michigan

$4,530,900

14

Cornell

$4,483,270

18

Duke

$4,221,141

Inside Higher Ed, New Report Finds Questionable Returns on MBA Programs

https://taxprof.typepad.com/taxprof_blog/2022/03/law-school-is-usually-a-good-bet-93-percent-have-positive-returns-24-percent-have-1-million-roi.html

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