Master's programs: Cash cows for universities, financial burdens for students
Brown University recently announced a $46 million deficit for the 2025 fiscal year that could exceed $90 million by 2026. To address this issue, the institution plans to expand its master’s programs. It hopes to double the number of residential master’s students and increase online enrollment to 2,000 learners within five years.
While this strategy may alleviate Brown’s financial woes, it raises critical questions about the broader implications of such expansions in higher education.
Master’s programs have been criticized as “cash cows” for universities. Mark Schneider, a nonresident senior fellow at the American Enterprise Institute, has pointed out their questionable return on investment for students. Data from the Foundation for Research on Equal Opportunity show that while the number of master’s degrees awarded in the U.S. grew faster than bachelor’s and doctoral degrees between 2010 and 2020, nearly half of these programs had negative return on investment.
Despite Brown’s assurances that it will focus on high-quality programs aligned with market demand, it has not specified which fields of study or industries it plans to target, nor has it addressed expected student outcomes. Instead, its emphasis appears to be on its own financial benefits amid stagnant undergraduate tuition revenue.
The national growth in master’s programs over the last two decades follows the establishment of the federal Direct PLUS Loans program for graduate students in 2006. This program allows students to borrow up to the full cost of attendance, a substantial increase from the previous $18,500 annual limit. Research from the National Bureau of Economic Research shows that this policy has caused tuition prices to increase, affecting both borrowers and non-borrowers.
Moreover a study by The HEA Group and Student Defense found that alumni from one-third of graduate programs owe more than they initially borrowed. Yet, due to limited federal data on graduate program outcomes, higher education researchers like myself struggle to evaluate these programs. The lack of transparency and accountability helps perpetuate the higher educational industrial complex, for which institutional finances come before of quality education and student success.
Brown is not the only prestigious institution that has attempted to leverage master’s programs for financial gain. Federal data compiled and presented by Jon Boeckenstedt, a higher education writer and vice provost of enrollment management at Oregon State University, shows that elite universities such as New York University, USC, Columbia and Harvard rank among the top producers of master’s degrees, alongside for-profit institutions such as Western Governors and Grand Canyon University. This juxtaposition highlights how elite universities, which restrict access to their undergraduate programs with admission rates in the single digits, benefit financially from large master’s enrollments.
For-profit institutions have long faced scrutiny for alleged exploitive practices. This scrutiny has often been justified, but Preston Cooper, an economist and senior fellow at AEI, has noted that wealthy, elite institutions also exploit the Grad PLUS program. If policymakers are alarmed about for-profits exploiting students, they should be even more panicked to see Brown openly expanding its master’s programs in order to solve its own budget problems.
Safeguards are needed to protect students from predatory degree programs with high costs and low returns regardless of whether the institution is a for-profit or a non-profit. The Century Foundation has proposed reforms such as setting reasonable loan limits, ensuring program value and return on investment, and improving data disclosure and transparency that could benefit both students and taxpayers.
Brown’s financial challenges also highlight broader concerns about institutional spending priorities. Administrative costs at elite universities have ballooned in recent years. A report from the Progress Policy Institute shows that many institutions have far more staff than faculty.
At Brown, there is one administrative staffer for every 3.1 students, but only one faculty member for every 6.2 students. Instead of seeing these ratios as an issue, Brown is grabbing for more revenue to support its current operations. Given the unlimited nature of federal graduate loans, it makes sense that institutions would see master’s programs as an opportunity to subsidize administrative excess — a great business decision, but one that comes entirely at the expense of the student.
Adding to the concern that Brown’s administrative bloat is contributing to its financial deficit, the university recently announced it was adding five new diversity-focused admission positions amid declining representation of historically underrepresented groups in its undergraduate class — a drop attributed to the Supreme Court’s ruling on race-conscious admissions. As a former admission officer, I can tell you that recruiting is not a problem for a university with a 5.4 percent acceptance rate.
If Brown wanted to be more accessible, it could expand its undergraduate enrollment, or even create a targeted program for historically underrepresented students. For instance, Boston College, another highly selective institution in New England, recently opened Messina College, a two-year associate degree program that enrolls 100 first-generation and low-income students. This program is the type of practice that can increase access to elite institutions — specifically their highly valued undergraduate degrees, not their get-rich-quick master’s programs.
Ultimately, policymakers must recognize how federal loan policies can be exploited not only by for-profit colleges but also by elite, non-profit institutions. Increased data disclosure on graduate program outcomes is essential to ensure transparency and accountability. Without such measures, prospective students remain uninformed about their educational options while taxpayer dollars risk being funneled into Ivy League coffers.
At a time of declining public support for higher education, colleges and universities must reaffirm their societal role through excellence, affordability and transparency — not by prioritizing financial expediency over student success.
Ryan Creps, Ph.D., is a higher education researcher who studies college admission and enrollment.
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