Report: Education Funds Wasted on Master’s Degrees

Published October 19, 2012

Although master’s degrees in education do not link to better instruction, states spent nearly $15 billion in the 2007-2008 school year on this wasteful “master’s degree bump,” according to a summer report.

“The Sheepskin Effect and Student Achievement” puts numbers to a long-studied difficulty. Though some research has shown math and science teachers improve instruction by earning a master’s degree, 90 percent of teachers who hold master’s degrees are no more effective than those without them.

The economic research demonstrating this waste has been clear for a long time, says Jason Richwine, a Heritage Foundation senior policy analyst.

“The real contribution [the report] adds is it quantifies how much money is actually being spent on the master’s ‘bump,'” Richwine said. “We’ve known for a while that the master’s degree is not a useful thing for the teachers to get. It’s making education reform a bipartisan issue.”

The pay bump artificially increases the number of master’s degrees, the authors found, and soaks up funds school districts could use on measures that actually increase student performance. Districts also often pay extra to reimburse teachers for graduate school tuition, but the authors found teachers did not earn enough to offset their master’s degree costs..

Huge Spending Spike
Report authors Raegen Miller and Marguerite Roza first studied master’s bumps in 2003-2004, finding they caused districts nationwide to allocate an extra $8.6 billion.

Since then, that extra spending has grown 72 percent.

“What was most startling to me was how much it grew in the time span we did the first analysis to the second,” Roza said. “We’ve always known it’s been a problem, and while we ignored it, it doubled.”

A recent influx in master’s degree earners means states have continued to pour money into step pay systems, which compensate employees according to length of service and credentials. Teachers unions strongly support “step and lane” pay systems that pay teachers in this fashion, because checking boxes is achievable for more teachers and more likely to lock teachers into the system for longer periods of time.

“Right now what we do is precisely backwards,” said Marcus Winters, a Manhattan Institute senior fellow and author of Teachers Matter. “We have a system that makes it difficult to become a teacher and then we compensate them based on credentials and years in the classroom, versus how effective a teacher actually is.”

Instead of requiring years of teaching credentials statistically proven to be useless, Richwine said teacher training should focus on apprenticeships and student teaching. Such practical learning has proven more effective and less costly, he said.

Most people would not think earning a master’s degree would fail to make much difference in teacher quality, the report says, but this is so in education because most education master’s degrees do not focus on improving instruction. For example, the National Council on Teacher Quality found only 15 percent of the education schools in a representative sample provided teaching students with even minimal exposure to the science of reading.

‘Appetite’ for Reform
Many policymakers are saying states do not have enough money to pay employees for credentials that do not pay off for taxpayers and children, Roza said.

“Right now, with constrained resources [there is] lots of appetite for doing things differently … to make a tradeoff on what really matters,” Roza said.

The two state policies most likely to increase the percent of teachers holding a master’s degree are: requiring an advanced degree for professional licensing, and requiring employers to pay more to teachers with advanced degrees. Eight states require the first, and 16 require the second.

Some states reacted defensively to the initial study, Roza said, but Oregon, Illinois, and other states used the results to begin pinpointing wasted spending and improve funding decisions.

“The higher education institutions reacted very [strongly] the first time we published the study. Many felt threatened at the potential incentive to end teachers’ getting a master’s degree,” she said. “This time around it seems like states have a big push to improve education.”


Learn more:
“The Sheepskin Effect and Student Achievement,” Center for American Progress, July 2012:


Image by Cybrarian.