5 Reasons I Could Be Wrong About The Future Of Graduate Student Debt


I have publicly stated that we have peaked in graduate student debt.

Never in the history of the universe has anyone ever won a bet betting that anything about the cost of higher education would go down. So if I’m right, that would be a first.

My prediction that the future will bring less debt to graduate students is, in reality, an argument that master’s degrees are getting cheaper. In this article, I explain why the total investment that students must make to receive a master’s degree is likely to drop.

The first argument is that online learning is booming. An online master’s degree may not be cheaper in tuition and fees than its residential counterpart. Anyone who has ever designed and managed an online degree program knows how expensive it is to do it right. The argument for less student debt is based on the observation that most online masters students are also full-time working professionals. They learn while earning. These salaries can hopefully replace some of the loan burden.

The second argument I make is that the dissemination of low-cost online degree programs will have a measurable effect on the overall masters market. This new generation of affordable online degrees may enroll enough masters students to move the debt needle. Instead, these new degrees – whether it’s an MBA or a $24,000 MPH – will put downward price pressure on the entire master’s program ecosystem. .

How could this prediction be wrong?

1 – Master’s awards and graduate student debt are two different things:

Even if the average price of master’s degrees begins to decline (a highly questionable assertion), it does not follow that average graduate student debt will go in the same direction. First, there are many other graduate degrees besides master’s degrees. Medical and law schools don’t go online, and they certainly don’t offer low-cost online degrees.

More importantly, college debt is held by graduates of all ages. Newly cheaper master’s degrees do nothing to help those paying off debt from high-cost programs they’ve already graduated from.

2 – The new online master’s degree will increase demand for these programs, leading to higher overall student debt:

I may be getting the relationship between e-learning and debt exactly backwards. Online education reduces the friction of enrolling in a master’s degree program. The ability to continue working while receiving this degree will increase the demand for online programs.

Since student debt is cumulative, combining undergraduate and graduate student debt, more students attending more master’s programs will inevitably lead to higher levels of overall student debt.

3 – The cost of online masters programs will increase as marketing and recruitment costs climb:

Want to hear something crazy? Directors of online degree programs must now plan to spend about 20% of tuition revenue on marketing. That’s right. The cost of bringing online master’s students to the door drives up the price of a master’s degree by 20%. An online degree program that costs a student $50,000 will instead cost $40,000 if marketing costs are removed. That’s insane, because most of those online program marketing dollars add up to the bottom line of businesses that need the money the least. Higher education now subsidizes big tech. We are part of the technological windfall for Alphabet (Google Ads), Microsoft (LinkedIn) and Meta (Facebook).

As the number of online programs increases, the competition for students increases. This trend drives up marketing costs as more schools compete for leads. Where it will end, no one knows. Already, providers of online non-degree programs often spend 40% of their revenue on digital marketing for “customer acquisition.” Digital marketing costs could very well drive up the prices of online master’s degrees, leading to continued increases in graduate student debt.

4. Low cost online programs will continue to be a niche offering:

I am seduced by the potential to bend the cost curve of education by introducing large-scale online programs. The way scaling online programs works to save money is that they break the traditional education delivery model. The different components of the educational bundle are separated and optimized.

Teachers – the subject matter experts – are primarily used to develop and deliver educational content. Facilitators bring presence, interaction and feedback to the learning experience. Coaches work with students to help them navigate the program. Peer interaction and social learning are built into the curricula instead of being integrated into traditional teaching methods.

Designing for quality at scale is a challenge. This is a very resource-intensive effort to get it right. Universities may choose not to make these investments to create quality online programs at scale. Most colleges and universities don’t have the staff and bandwidth to do what it takes to design at scale.


There is a risk that the rise of the online program management (OPM) industry will lead to an increase in degree prices and, consequently, an increase in student debt. There are many good reasons for a school to partner with a company to launch an online program. OPM is providing the initial funds to develop, design, launch, market and support the program. This money reduces the risk of the online program for the school. Working with an OPM allows universities to get to market faster and have greater confidence that their online master’s will attract enough students and revenue. An OPM provider will only invest in an online degree program that they believe will perform well – and OPMs are very good at doing market research.

However, what might be beneficial for the school may not be optimal for the student. Traditional OPMs operate on a revenue-sharing model and seek to maximize total revenue, not reduce student prices. Traditional OPMS are very good at digital marketing and recruiting. They are able to stimulate demand for programs. Prospective students can be convinced that the return on investment of taking out student loans is worth it in terms of future career earnings and promotions.

More masters students in traditional high-cost online masters programs will drive up student debt levels. The rise of non-profit/for-profit partnerships in higher education may be part of the reason for our growing student debt crisis.

Otherwise, why could I be wrong in saying that the future will bring cheaper master’s degrees and, possibly, less graduate school debt?


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