Major, Master’s and PhD: Wrong Way to Get Rich

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“Universities have been progressing from providing scholarship for a small fee into selling degrees at a large cost” – Nassim Nicholas Taleb

We live in a society where so many people believe that graduating from college is the way to make the most money. We are absolutely certain that most people are entering universities seeking an improvement in their ability to earn money. It is not politically correct to speak, but this is the truth.

In times not too distant, becoming a white-collar professional (doctor, lawyer,..) meant you would be rich. Or at least, richer than most everyone else. A master’s or doctorate was a sign of employment with six-digit salary. Now things are a little different: 15% of graduate and professional school students graduate really reach the six-digit mark of debt.

The numbers behind the status

“You can own all the great books for less than a couple hundred bucks. Yet we spend six figures at colleges to be illiterate.” Unknown

In US, The National Center for Education Statistics reports that schools are expected to award 821,000 master’s degrees and 177,500 doctoral degrees in 2015. Another 2014 study from college planning site EAdvisors found that:

1) 51.9% of master’s degree recipients graduate with student loans, the average amount of which is $56,661
2) 37.5% of doctoral degree recipients take on loans, average amount $74,958
3) 57.3% of professional degree recipients on take on loans, average amount $146,466

Compared to undergraduate students, EAdvisors finds the likelihood that grad students will hold six-figure debt has grown disproportionately over the past two decades:


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An United States Department of Labour’s reports that holders of a doctoral or professional degree earn an average of $96,420 a year, and holders of a master’s degree earn an average of $63,400 a year. Using United States Department of Labour data on some of the better-known white-collar occupations, here’s the average annual salary of:

1) College teachers: $75,780
2) Lawyers: $133,470
3) CEOs: $180,700
4) Physicians and surgeons: $194,990

Compared to the average annual wage of all US workers — $47,230 — those are impressive figures. However, things aren’t as great as the dollars and cents seem.

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Student debt is a burden

First of all, there’s the problem of getting the jobs that pay. For example, The New York Times reports that only 40% of law-school grads from the class of 2010 are working at law firms. Doctors may have the brightest outlook, in that specialists like anesthesiologists and surgeons earn the highest annual median wages in the US — $246,320 and $240,440.

Still, the path to high earnings is a difficult one for doctors, who spend more time in school than almost anyone else. If you consider their first years out of class as their first on the job, their starting salaries aren’t so high.

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Below we have the testimony of a former resident doctor in the United States. Dr. Matthew Moeller is the Gastroenterologist in Grand Rapids, Michigan (take a google), wrote this passage to a few years and we reproduce here.

“$196,000. That was the bill, for the tuition, the tests, the books, the late night pizza. $196,000 financed through a combination of student loans, personal loans, and high-interest credit cards, now consolidated, amalgamated, homogenized into one life-defining number for my personal convenience.

I then relocated to Michigan and moved into a small condo in Ann Arbor, where I started my residency. As a resident in Internal Medicine, I earned a salary of $39,000. All the while, interest continued to accrue on my mother-lode of debt at the rate of $6000 per year due to the high debt burden. Paying down this debt was not possible while raising two children. My wife began working, but her meager salary as a teacher was barely enough to cover day care costs. During residency, my costs for taking licensing examinations, interviewing for specialty training positions, and interest on the large loan ballooned my debt further, now exceeding $230,000, all before I began my career as a real doctor.”

Moller’s experience is his own and not applicable to every grad, but it makes a strong point. An absurd amount of debt and a salary unable to pay it as soon as possible is fatal: the amount only increases over time. And the person also has other expenses, such as home, car, child, wife, etc.

Remember: we are taking into account the ability to pay for lawyers and doctors! Consider other professions and see that the problem is enormous.


The road to wealth

If you really want to be part of the elite wealthy class of citizens, you need to be an entrepreneur, and you can do that with or without a degree.

The IRS Statistics of Income Division has published “400 Individual Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year, 1992-2009.” In 2009, it took $77.4 million in adjusted gross income to crack the top 400.  Where it gets interesting is how the top 400 made their money:

  • Wages and salaries: 8.6 percent
  • Interest: 6.6 percent
  • Dividends: 13 percent
  • Partnerships and corporations: 19.9 percent
  • Capital gains: 45.8 percent



a) Academic titles enable considerable improvements in the employee’s salary.

b) Academic titles have no correlation with obtaining wealth.

c) Working for a salary won’t make you really rich.

d) When you have huge student debt, a good job are not enough to get you out of the ditch.

e) Owning a business can build a solid foundation of wealth and *someday* generate a huge financial windfall — and make you *really* rich.

“College doesn’t make fools; it develops them. Its doesn’t make bright men; it develops them. A fool will turn out a fool, whether he goes to college or not.” John Graham



  1. Another post with great content.

    Universities with their status offered through masters and doctorates are a business like any other. As you mentioned in the conclusions: raise the salary of the employee. True wealth is not provided through academic status. And the opportunity cost of this choice may rather be the differential in the race for it.

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