Master’s Degree Pay Bump for Teachers

The fact that teachers with master’s degrees are no more effective in the classroom, on average, than their colleagues without advanced degrees is one of the most consistent findings in education research.  In a study published in 2011, Paul Peterson and I confirmed this finding by comparing the student achievement of the same teachers before and after they earned master’s degrees, and found no impact.

This finding may be non-controversial among researchers, but it has largely been ignored by policymakers.  Ninety-six percent of the 112 major U.S. school districts included in the National Council on Teacher Quality (NCTQ) Teacher Contract Database pay teachers with MA degrees more than those with BA degrees, with an average difference of $3,205 in the first year of teaching, $4,176 in the fifth year, and $8,411 at the top of the salary schedule.  The size of this pay bump varies widely, topping out at over $30,000 in three districts in Maryland.

It is not surprising that teachers respond to these incentives by earning MA degrees.  In 2011-12, nearly half of U.S. teachers held such a degree.  However, it comes at a price.  As higher education costs continue to rise, teachers are going deeper into debt in order to earn these degrees.  The proportion of education MA students with graduate debt increased from 49 to 60 percent between 2004 and 2012, and median graduate debt levels increased (in constant dollars) from $27,455 to $35,350.  Factoring in undergraduate debt pushes the 2012 figure to $50,879.

In most fields, prospective students can only make an educated guess about the payoff to a post-graduate degree, but, for public school teachers, it appears in black and white on the salary schedule for their district.  For an MA degree to be worth the cost, which can exceed $50,000 in tuition alone, the teacher must expect to remain in the profession long enough to make the investment worthwhile. But how long is that? And for teachers with different career lengths, how much of their salary bump do they have to fork over to a college or university for an otherwise worthless credential?

I address this question by merging salary schedule information from the NCTQ database with data on the tuition cost of an education MA degree at colleges and universities located near each school district. For each district, I calculate the financial cost and benefit for new teachers considering whether to earn an MA degree part-time over the first four years of their careers.  The cost is simply the tuition spread over four years. The benefit is the MA salary bump, which begins in the teacher’s fifth year and continues as long as he stays in the district.

In the typical district, a teacher has to stay nine years just to break even on the tuition cost of the degree.  In other words, the teacher has to hand over his MA pay increase every year for five years in order to cover the cost of the program.  Teachers with longer careers will eventually come out ahead.  After 20 years in the classroom, a teacher will net about three-quarters of the cumulative pay bump after tuition, a statistic that rises to more than four-fifths after 30 years.

The figure below shows these estimates for the median district as well as districts at the 25th and 75th percentiles.  The extent to which MA degree programs capture the MA pay bump varies significantly across districts.  In one-quarter of districts, it takes no more than three post-MA years to break even and a 20-year teacher gets to keep at least 84 percent of the pay bump.  But in another quarter of districts, it would take at least seven post-MA years to break even and a 20-year veteran would keep no more than 56 percent of the salary increase.

Percent of Career-long MA Salary Bump Teacher Keeps After Tuition

Are these numbers large or small?  For teachers who plan to spend “only” 10 years in the classroom, earning an MA in education is likely a waste of money and effort.  They may want to wait to start working on the degree until they have a few years of teaching experience and a better sense of how long they plan to stay.  But they face a catch-22: the longer they wait to earn the degree, the fewer years they will receive the MA pay bump (assuming a fixed career length).  For teachers who expect to remain in the public schools for longer periods of time, the MA degree represents a potentially sound upfront investment to increase their lifetime earnings.

What does this analysis mean for policy?  Economic theory predicts that workers with postsecondary credentials earn more because the degrees improve their effectiveness on the job or serve as a signal of higher ability.  In education, the MA degree does neither of those things. Eliminating the MA pay bump is the obvious solution, and last year North Carolina became the first state to take that step.  But absent such a move, perhaps states should instead encourage the creation of low-cost MA programs so that more of the pay bump goes into the pockets of teachers, rather than the bottom lines of universities.  Low-cost programs raise concerns about quality in other fields, but in education, it’s hard to imagine a new program being worse than worthless.

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3 Comments

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3 responses to “Master’s Degree Pay Bump for Teachers

  1. Rhonda Anderson

    Teachers have NO OTHER WAY to advance salary at a rate comparable to other professions. We are paid on a scale and often get cuts from the scale. It is a slap in the face that it would be considered to take away this incentive from the best and brightest teachers who spend so much time shaping the minds of students. If this happens we will be left with the least intelligent or most inexperienced to educate kids.

  2. At a rate comparable to other government or private industry professions? Private and government salary scales were cut since the Great Recession.

    The idea is that teachers with advanced degrees don’t improve student achievement. I would say student achievement isn’t the one and only priority and the quality advanced degrees are extremely helpful but aren’t reflected in student standardized tests. That being said, the state and federal government has decided that standardized tests are the end all to be all.

    Online diploma mills don’t help the argument either. We should either find another mechanism for figuring out who our best teachers are and/or just raise the pay scale in general.

  3. I went into secondary education because of my natural gifts in my content area, my passion for sharing knowledge, and my desire to help society by helping to shape young lives. That was a couple of decades ago. I still love teaching, but the negative rhetoric directed at teachers, and the talk of paying us less, taking more of what we’ve earned, is a real threat. Many of us have no other source of income and very little free time in which to pursue one. I sometimes wish I had taken a different route. If this type of scenario continues, expect teacher shortages to become the norm.