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In June I dropped my youngest son Zev at summer camp in Michigan. On the eve of camper arrivals, Tamarack sends a Spotify playlist of “Songs of the Summer.” So as we drove from the Detroit Airport to our palatial room at the Troy Inn & Suites (if you ever need a place to stay in the greater Troy region, keep driving), we previewed the songs Zev would hear on canoe trips, in the dining hall, and when his counselors shake him out of bed at 7 a.m.
The songs sounded eerily similar. So like the comedians who, 30 years after the fact, came up with the category “Yacht Rock” to describe the music of Steely Dan, The Doobie Brothers, Kenny Loggins, and Christopher Cross ( Dockumentary playing on HBO, Yacht Rock channel 15 on SiriusXM), we decided we had discovered a whole new category of music: Camp Rock.
Camp Rock is relentlessly, annoyingly upbeat. The playlist features songs like Best Day of My Life, Lucky Day, Our Moment, Nothing Better, and Gimme That Sunshine. Zev and I riffed on absurd new Camp Rock titles like Woke Up Winning, Sunshine On My Shoelace, Hyped For No Reason, and You Are Now. But even more than Yacht Rock – smooth in every respect, but only uniform in the sweet, soulful sound of Michael McDonald on every Yacht Rock classic – Songs of the Summer have identical characteristics that cannot possibly be a coincidence.
Excessive positivity aside, here are the telltale signs of Camp Rock:
The Yacht Rock guys look like geniuses now; while only Chris Cross actually sang about sailing, the vibe fits as snugly as a captain’s hat. And when some future generation of summer campers revolts at the unnecessarily optimistic music blandly blaring at the waterfront, perhaps Zev and I will be viewed as equally prescient.
The truth is it’s not difficult to put a label on a genre or era post facto. And in higher education, last week marked the end of the Golden Age of Master’s Degrees. For with the passage of President Trump’s One Big Beautiful Bill, Congress hit higher education where it will hurt most: ending federal student loans that allowed schools to turn master’s degrees into high-priced profit centers.
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Back in 2006, when college was still universally viewed as a force for good and more higher education was better than less, Congress extended the federal PLUS loan program to graduate and professional school programs. For colleges and universities, there were two things about PLUS loans that felt as giddy as the first day of camp. First, students could borow up to the full cost of attendance: tuition, fees, room, board, and other expenses. Second, there was no limit whatsoever. Students got as much as they needed with no lifetime cap.
As colleges are rational economic actors, the predictable result of unlimited government loans was a gusher of master’s. The number of programs grew by over 70% with most of the new ones online. The greedy culprits were primarily private nonprofits, ranging from large research universities like NYU and USC to small colleges which weren’t even in the master’s game at the dawn of Grad PLUS. Over the past 20 years, private colleges and universities more than doubled their master’s offerings.
So began a vicious circle, supply begetting demand from candidates struggling to differentiate themselves as digital hiring took hold – when applicants for each open good job swelled to thousands and companies began relying on applicant tracking systems to filter résumés based on keywords in job descriptions. As early adopters of new master’s programs began popping up in candidate pools, one simple (and lazy) winnowing strategy was to add the keyword “master’s degree.” This new filter allowed companies to pick apparent winners out of a swelling mass of online applicants. Companies began adding master’s degrees to job descriptions and – a mere five years after the launch of Grad PLUS – the New York Times declared that master’s were the new bachelor’s, becoming “the entry degree in many professions.”
Thanks to thousands of new programs and degree inflation, more than 25M Americans now have master’s degrees – 2x since the launch of Grad PLUS. In the past few years, grad students received nearly 50% of all federal student loans. A recent survey found over 40% of college graduates intending to earn master’s degrees with 21% enrolling immediately in graduate and professional programs.
Which might be fine if they paid off. But they don’t. Not because master’s degrees don’t lead to better employment outcomes. They do, but only marginally. Employment rates increase by less than 1%. And while income grows for 3 out of 4 master’s recipients – meaning 1 in 4 would have done better not taking time off work – it’s not by much. Masters in the arts, humanities, and human services show de minimis gains. MBAs only show a 9% bump. And the 15% increase from a master’s in education is less market validation than teachers unions linking M.Ed.s with pay bumps in school district contracts.
The problem is the cost and concomitant debt. Unlimited government funding allowed schools to inflate prices to high heaven, resulting in:
Less selective universities priced their programs just under these fancy umbrellas. As a result, the net price paid by master’s students more than doubled in 20 years. Before Grad PLUS, the average master’s student who tapped federal loans took on debt of $33K. Now it’s over $70K.
Researchers have calculated a negative ROI for 40% of all master’s degrees. The only truly valuable programs are in health sciences, engineering, and – until recently – computer science. Preston Cooper estimates that a master’s in the arts and humanities has a median return of negative $400,000 (see e.g., Chicago’s master’s in humanities with an average starting salary of $37,928). Not even the MBA, the iron horse of master’s degrees, is immune. Over 60% of MBAs now produce negative ROI. And 16% of master’s offered by highly selective universities – including the aforementioned – are rotten to the core: either preying on naïve, low-income students who have been led to believe that adding the institution’s brand to their résumé is priceless, or baubles to ornament the résumés of rich kids.
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But with President Trump’s July 4th signing of the One Big Beautiful Bill, starting next summer this parade of horribles will come to a screeching halt. First, the new “do no harm” standard will eliminate federal student aid for the ~25% of master’s programs where the credential doesn’t result in a pay bump within four years. (Although “do no harm” is a misnomer because making only a bit more coupled with six-figure debt sounds like harm to me.)
More important, Grad PLUS is being removed from the student loan menu. Master’s students will be limited to $20,500 in unsubsidized federal loans each year, leaving a large financing gap for thousands of programs. Alternative funding sources include private loans and Parent PLUS loans (now capped at $65,000 per child). So expect three results: (1) many applicants won’t be able to afford expensive master’s degrees because they won’t have the credit to qualify for private loans; (2) students who qualify for private loans will pay more – without competition from Grad PLUS, private lenders will charge higher rates; and (3) billions of debt will shift from grad students to their aging parents.
There’s another possibility. The Department of Education could classify some master’s programs as professional programs, eligible for the higher $50K annual federal loan limit. This isn’t a panacea for the priciest programs, including most MBAs. But the gap would be narrowed. Master’s degrees that lead to licensure like the MSW and MFT are likely to be viewed as professional even though they’re among the most negative ROI programs. MBAs are a harder case and could go either way. Master’s in the arts and humanities have no shot. It’s likely Secretary McMahon’s Department of Education will take the hardest possible line here – perhaps relegating MSWs and MFTs to the lower graduate limit – and justifiably so.
There’s one major casualty of Grad PLUS’s demise: medicine. MD programs are unquestionably professional. But with an average annual cost of attendance of $84K, medical students will face a $30-40K financing gap each year. Which will make it much harder for students from low-income backgrounds to become doctors. While most aspiring doctors will get loans – nearly half of medical programs (medicine, dentistry, pharmacy) produce a return on investment of more than $1M – they’ll be more expensive, and students with lower credit scores may be out of luck. Dr. David Lenihan, former President of Ponce Health Sciences University, a medical school with campuses in Puerto Rico and St. Louis, told me we’ll see “thousands of students – especially those from lower-income backgrounds in rural and underserved urban areas – shut out of the medical profession entirely.” Dr. Lenihan also pointed out that “these are the students most likely to return to their communities to practice medicine. When we make medical education unaffordable for these students, we’re not just limiting their opportunities, we’re pulling critical lifelines away from rural counties, inner-city neighborhoods, and tribal lands where doctor shortages are already at crisis levels.” (The same goes for new lawyers who’ll be hard pressed to afford public sector roles like prosector and public defender, or nonprofit legal work.) While the medical lobby was understandably preoccupied with the Bill’s changes to Medicaid, it’s shocking the many doctors in Congress weren’t moved to carve out an exception. The good news is there’s still a year to course correct.
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I’m not praising President Trump’s One Big Ugly Bill. It’s sensationally imprudent to kick the can down the road on deficits, social security solvency, and climate change. But even a broken clock is right twice a day. And Republicans are right to put an end to the Golden Age of Master’s Degrees.
Over the past two decades, as digital transformation (and higher education’s failure to keep up) has increased 20-something unemployment and underemployment, grad school became the default – the path of least resistance. But adding $70K+ to increasingly unsustainable college debt should never have become the path of least resistance. So the new financing barriers will make young people think, and think again, before signing onto a low-ROI master’s program.
The alternative is to invest some of the Grad PLUS billions in lower-risk earn-and-learn pathways. Rather than sitting in classrooms and paying eye-watering tuition, young Americans should be able to work while they learn a profession. As the master’s degree safety valve is shut off, pressure for earn-and-learn options will mount.
For their part, hundreds of colleges and universities will see serial double-digit declines in master’s enrollment. And if they weren’t in trouble already from declining demand and new state laws (MN, OH), the enabling online program managers (OPMs) will need to pivot. Enterprising schools and OPMs will endeavor to restructure programs and figure out how to deliver them profitably below the $20,500 cap. But most will wait and see, hoping for the best.
When hopes are dashed, institutions that have been balancing budgets on the backs of grad students will find an urgent need to restructure everything the master’s boom has been subsidizing. The Golden Age of Master’s Degrees allowed them to postpone the day of reckoning. But as the master’s surplus evaporates over the next few years, budget nips and tucks will no longer be enough. Invasive surgery will be required.
By subsidizing inefficient programs and unnecessary administrators, the Golden Age of Master’s Degrees postponed higher education’s day of reckoning: the day colleges and universities will be held accountable for the economic outcomes of their graduates. With the disappearance of Grad PLUS, that day is nigh.
Because last Friday was not the best day for master’s degrees, hundreds of colleges could use some cheering up and positive thinking. So if you find yourself on a master’s dependent campus this summer, consider letting loose with a Camp Rock classic like Best Day Of My Life.