Like most graduates of Northwestern’s online master’s of arts in counseling program, Joe Vegas is buried in debt.
A Buffalo-based mental health counselor, Vegas graduated in 2019 from Northwestern’s counseling program, having taken out around $189,000 in student debt. Now that he’s five years out of school and fully licensed, he told me, he’s on track to make $62,400 in 2024, which he considers to be a good year.
“We all just laugh,” Vegas told me about when he talks to other Northwestern grads. It’s the only thing they can do. “That’ll never get paid. Ever.”
Fifty-five miles from Northwestern, in an unfashionable west-of-Chicago suburb, lies Aurora University. The scrappy, unassuming institution offers an addiction-focused mental health master’s degree, also mostly online. It’s classified under the same counseling umbrella as Northwestern’s, but it has very different outcomes. Aurora students graduate with an average of $27,588 in debt, around six times less than the median debt of students in Northwestern’s program, $153,657. Five years later, they earn an average annual salary of $76,132, roughly $20,000 more than the $56,897 Northwestern grads bring in.
“We are an exceptionally frugal place,” Brenda Barnwell, the dean of Aurora’s College of Education and Social Work, told me. “We’re not, you know, popping up new buildings like crazy.” For her, online classes have gone a long way toward solving a parking shortage on campus—not a long way toward unlocking more money from students’ wallets. “We’re a Hispanic-serving institution, and the vast majority of our students are first generation,” she explained. “Working on keeping those tuition dollars at a minimum has made a big difference for [them].”
Aurora’s program is not well known, despite its stellar debt and income statistics. U.S. News & World Report ranks social work programs but not counseling programs, and their social work ranking (like most of their master’s degree rankings) just shows the results of an insider survey meant to measure prestige, factoring in neither how much the program costs nor how much graduates tend to earn down the line.
To fill that gap, the Washington Monthly created a new set of rankings (see “America’s Best and Worst Colleges for Master’s Degrees”). Using recently released data from the federal government’s College Scorecard, we assess master’s degree programs in the 10 most popular fields—business, educational administration, nursing, teacher education, social work, and so on—based on how much debt students graduate with, and how much they can expect to earn five years later.
While Northwestern’s program, with around 300 graduates per year, is among the worst offenders in the entire master’s program marketplace, it is by no means the only predatory program. There are 631 master’s degree programs where the median debt at graduation exceeds the median income five years after graduation, making up 11 percent of all master’s programs for which there is federal data. Each year, more such programs spring up, as a new school picks up on the game and existing programs raise tuition. According to a report from the Century Foundation, AEI, and Education-Counsel, outstanding federal loans to graduate schools have gone from $37 billion to $90 billion in just the last seven years, and median graduate loan balances have gone from $21,800 to $57,800 in just the last 10 years. Meanwhile, the earnings premium afforded to those with master’s degrees hasn’t budged in decades, according to a study by Kristin Blagg at the Urban Institute.
Jason Delisle, another Urban Institute researcher, has been studying the rising cost and increasing ubiquity of master’s degree programs for years. As Delisle told me, colleges’ motives in opening new programs aren’t hard to parse: “They’ve been opening master’s degrees because they make money.” Students can borrow their full cost of attendance from the federal government, which includes room and board, and the government will pay for the program up front, which means universities have no incentive to keep costs down or make sure that students can pay off their debt.
First enacted as part of the Deficit Reduction Act of 2005—passed by Republican majorities in Congress and signed by President George W. Bush—uncapped graduate school loans were thought to save the government money because they’d have higher interest rates and be easily repayable by most students. Income-driven repayment plans followed shortly after for the few students expected to have trouble paying them back. These plans were then scaled up in 2010 and again earlier this year in response to the debt crisis these loans had helped create.
After between 10 and 25 years (depending on the amount of debt and whether a graduate is in a public service job) of monthly repayments on an income-driven repayment plan, the remaining balance is forgiven. For the next two decades, Joe Vegas and many others in his Northwestern cohort will likely owe the federal government six-figure debt, fail to pay it off, and, eventually, see the balance forgiven at the taxpayer’s expense.
One student told me her recruitment agent was relentless, calling her almost daily and remembering every detail he heard. “He name-dropped some of my professors,” she said. “He remembered my pets’ names.”
At the 7 percent of programs that Delisle classifies as having “very high” debt to earnings, graduates can expect to see about $75,000 of debt forgiven, on average, after 20 years of paying toward their loan balance but never getting close to paying it all off.
For schools looking at the many prospective students willing to use uncapped federal loans to get their dream job, Delisle said, the only limit to the number of grad programs they open and the tuition they charge is how much they think they can get away with. And at schools with prestige and name recognition, that number seems to only get higher. Private nonprofit colleges are usually the most cynical offenders, dominating our rankings of programs that have the highest debt relative to earnings.
The students who graduate from such programs are financially trapped. If they get on an income-driven repayment plan, then they are spared from poverty, but if they ever do too well for themselves, the difference between their salary and a middling income will be siphoned off to pay for the massive loan (and its interest). Vegas, who’s on such a plan, usually makes so little money that his monthly payments are set at zero; now that he’s having a good year, he’ll likely pay a few hundred dollars a month in 2025. He’s looking to buy a small home, but he’s been rejected by almost every bank he’s applied to, and still lives in a rented apartment.
Of course, as Vegas has experienced, when considering a loan application for a house, a car, or almost any large purchase, creditors usually require you to put some money down and show some likelihood of being able to pay it off someday. That’s not the case for master’s programs. If you were to go to a sports car dealership and ask for a $189,000 car loan with 0 percent down and an income of under $57,000 a year—precisely the deal Northwestern offered Vegas—you’d be laughed out of the building (and be safe from crippling debt). Unlike the car dealer or the mortgage lender, Northwestern doesn’t care if you pay back your loans. They’ve already got the money.
When prospective students seek out resources to help them compare programs, they often find rankings that either prize prestige, not outcomes, like U.S. News’s social work rankings, or worse, search-engine-optimized consumer guides that use irrelevant undergraduate or university-wide data to rank master’s degrees, like Psychology.org’s counseling program rankings. The Wall Street Journal has an interactive that shows average debts and incomes two years after graduation across programs, but it’s behind a paywall.
Overwhelmed—or perhaps underwhelmed—prospective students often resort to asking for information from schools directly.
And that’s when the salespeople intervene.
Accreditors tend to stand idly by, imposing standards on programs’ faculty, curriculum, and assessment, but never on costs. The head of the largest counseling accreditor told me, “It’s the institution’s prerogative to set tuition and fees.”
“I signed up as someone who was interested and wanted more information about the program,” Sofia—who requested that we use only her first name—told me of her experience in the summer of 2019. “And the next day I got a recruitment call.”
According to Sofia, her recruitment agent was relentless, calling her almost daily and remembering every detail he heard. “He name-dropped some of my professors,” she said. “He remembered my pets’ names.”
She expressed to him that the program seemed too expensive, with a tuition (not including housing or any other costs) of between $133,824 and $190,440, depending on the track. But the recruitment agent countered, selling her on the “incredible power of being able to say that you went to Northwestern.”
This “incredible power,” as Sofia recalls him saying, is not recognized by the market. Northwestern’s median earnings five years after graduation, $56,897, are markedly lower than the median master’s program in this category: $63,675.
That recruitment agent worked for 2U, a private, for-profit online education program management company which also runs the online infrastructure that Northwestern’s master’s program uses—software that, one alum told me, she felt was constantly having “technological glitches” and felt “clunky and old.” Though 2U’s exact compensation from Northwestern isn’t publicly disclosed, the company’s standard deals with universities in 2019 involved keeping 60 percent or more of tuition revenues. (More recently, 2U has reduced its standard revenue-sharing fee for degree programs to 35 percent.)
If each student paid around $67,000 in tuition each year, annual revenues would be in the neighborhood of $20 million, much of which would be taken off the top by 2U.
The company—which is currently undergoing a financial restructuring—has faced criticism for this model in the past. A 2021 Wall Street Journal exposé skewered the University of Southern California’s master’s of social work program, which used 2U to recruit thousands of students, leading to a since-dismissed lawsuit against both 2U and USC. Last fall, the USC School of Social Work dropped its affiliation with 2U—paying them $40 million to sever the deal—and announced that it would run all its online master’s programs in-house. But if the university will save money with that move, it seems not yet to have passed on the savings to students. The list price of its MSW online program remains about the same. That program ranks last in our social work rankings.
Yet USC’s program is still financially far less ruinous for its graduates than Northwestern’s. The median debt as a percentage of income for graduates of USC’s MSW program, 175 percent, pales in comparison to Northwestern counseling’s 270 percent. As one former core faculty of the Northwestern program told me, the remaining tuition dollars that the university keeps—after 2U takes its cut—hardly seemed to be spent on the master’s program itself, which appears to involve only 13 total faculty and administrators. Of course, there’s no shortage of things to spend money on at Northwestern, both inside and outside of the Family Institute, which houses the program. The Family Institute serves 7,500 clients a year in family therapy, and Northwestern University runs a prestigious undergraduate program with generous financial aid and scores of fully funded PhD programs.
I reached out to Anthony Chambers, the head of the Northwestern counseling program, to ask him why the debt for students in its master’s program was so high in comparison to the salaries the students typically earn. Three weeks later, Sarah Frick, the chief external relations officer for the Family Institute, emailed me a prepared statement that touted the $1.8 million in scholarships that they give out—an average of $6,000 for each of their 300 yearly graduates—and noted that Illinois has “only 14 behavioral health professionals per 10,000 residents.” The program is overwhelmingly online and none of the alumni I spoke with live in Illinois.
For the time being, predatory nonprofit master’s programs seem all too safe.
The government tends mostly to focus on transparency, hoping that open data will help students make more prudent decisions and inspire universities to clean up their act when they see peer institutions charging less and delivering more.
There are some exceptions to this focus on transparency, including the occasional penalty for misleading students, like the $37.7 million fine President Joe Biden’s Department of Education imposed on for-profit Grand Canyon University last year for misrepresenting an approximately $55,000 doctorate as costing only around $45,000 (Northwestern’s counseling degree costs far more). Or the $700,000 fine levied on Temple University for misrepresenting its online MBA. Many fines are even smaller.
Another exception is the Biden administration’s new “gainful employment” rule, which applies only to for-profit colleges and certificate programs at nonprofit universities. To understand how limiting this restriction is, consider that for-profit schools educate only about 8 percent of postsecondary students. For the schools to which it applies, the rule states that for a program to receive federal funding and be part of the federal student loan program, the average annual loan payment amount (if the student were to pay it off in 10 years) must not exceed a certain percentage of the median graduate’s income. For a master’s program where graduates average a salary of $50,000, median debt couldn’t exceed $62,500, and for a master’s program where graduates average a salary of $75,000, median debt couldn’t exceed $112,400.
If Northwestern were to face this test, it would decisively fail. But it doesn’t face this test, because of its nonprofit status, which it has attained by essentially making sure to spend all of its profits or stash them away in its $14 billion endowment. Many of the master’s programs that adorn the bottom of our rankings would fail this test as well, but they don’t face it for the same reason—they’re nonprofit.
Accreditors also tend to stand idly by, imposing standards on programs’ faculty, curriculum, and assessment, but never on costs. As Sylvia Fernandez, the president of CACREP, the private accreditor in charge of counseling programs, told me, “It’s the institution’s prerogative to set tuition and fees.”
It doesn’t have to be this way. There is room for bipartisan congressional action and for increased regulatory scrutiny, if the political will is there. And it ought to be.
It’s very possible to run a master’s degree program—even in a popular, growing field in which salaries aren’t high, like counseling—without dooming most of your graduates to decades of financial ruin.
The College Cost Reduction Act, introduced this year by North Carolina Representative Virginia Foxx and cosponsored by 146 other House Republicans, caps master’s degree federal loans at $24,250 annually. The Urban Institute’s Jason Delisle himself recommended a similar cap to me of around $60,000 in lifetime loans for a master’s degree. The Century Foundation, a progressive think tank like Urban, also recommends a cap on federal loans for graduate borrowing. The main downside of a cap is that it would limit the ability of some students, especially those from lower-income backgrounds, to access higher-priced master’s programs, though a cap would also help save those students from, in many cases, crippling debt.
Another possible solution involves the gainful employment rule. The Department of Education claims that it doesn’t have the statutory authority to expand the rule to nonprofit degree programs, which may well be correct, especially after recent Supreme Court decisions that sharply limit the ability of agencies to flexibly interpret their own statutory authority. But that only strengthens the case for legislation that definitively gives the Education Department the power to regulate these programs.
If not forced to, universities could choose to clean up their act themselves. And we hope they do. It’s very possible to run a master’s degree program—even in a popular, growing field in which salaries aren’t high, like counseling—without dooming most of your graduates to decades of financial ruin. Just ask Aurora University, or any of the other programs in the “Best” category of our master’s degree rankings.
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