How Trump Is Bursting the $100 Billion Grad School Bubble

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news.

**Sarah Holder** (0:09)
Every fall, around 3 million graduate students from all around the world start classes at colleges and universities across the US. But this year, some of their classrooms will be a little emptier.

**Liam Knox** (0:22)
Some of the even most elite institutions in the country are seeing very significant declines in their grad enrollment.

**Sarah Holder** (0:28)
Bloomberg Education Reporter, Liam Knox.

**Liam Knox** (0:31)
Cornell is down by over 200 students. MIT is going to admit 500 fewer grad students in the fall. It's a huge deal for a university which is known for its graduate programs. Big flagships like the University of Wisconsin, they're seeing similar declines.

**Sarah Holder** (0:46)
Liam says the loss of those students could have a big financial impact on the US higher education system.

**Liam Knox** (0:53)
Universities are not just an IV-clad center of academic and intellectual enrichment. They're businesses. And over the past few decades, that business model has become increasingly leveraged on graduate programs, in particular, the master's degree.

**Sarah Holder** (1:10)
As undergraduate enrollment has declined in recent years, many universities have doubled down on their graduate programs, relying more and more on tuition from graduate students to fill funding gaps and support schools' ever-expanding offerings.
Today, the US market for grad school is worth about $100 billion. But that could all change.

**Liam Knox** (1:34)
Right now, the Trump administration is the biggest threat to that business model.

**Sarah Holder** (1:38)
The White House is on a mission to reshape the country's higher education system. And Liam says its policy agenda is hitting grad school programs in a few key ways.

**Liam Knox** (1:49)
There are policies that would make master's programs harder to pay for, that would make it much harder for international students to come and pursue these degrees, that make federal funding for grad programs a lot less certain. Those things hit at the financial heart of the modern American university and its business model. And in a lot of ways, that has a more widespread and sweeping effect on what American campuses might look like, what kind of power they have, than going after specific elite institutions.

**Sarah Holder** (2:25)
I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, how the US graduate school bubble grew, and the Trump administration policies that could make it burst.
Getting an advanced degree, like a PhD, has long been a status symbol, an extra boost for a resume, something that can lead to a pay bump or a fancier title in some professions. But the growing emphasis that colleges and universities have put on master's programs is actually a relatively recent phenomenon.

**Liam Knox** (3:03)
Master's programs have exploded in the past two decades. They've grown by double the rate as other degrees in the country. They're now the most commonly held advanced degree.

**Sarah Holder** (3:12)
There's a wide range of master's programs out there. You can go get a master's degree in public health, computer science or social work.
Or you can get what's considered a professional degree by going to medical school or law school.

**Liam Knox** (3:26)
Master's degrees have become kind of part of the financial foundation of the higher ed system and a huge part of how employers look for highly skilled workers in certain fields.

**Sarah Holder** (3:39)
What explains that? Why over the past few decades have master's degrees become so important?

**Liam Knox** (3:46)
Well, the explosion of master's degrees really kind of started in the mid 2000s for a number of reasons.
In 2006, the federal government created what's called the Grad Plus program, which is essentially a stream of uncapped unlimited loans for graduate students that would allow any student going to an advanced program to take out not only up to the cost of tuition, but also room, board, sometimes cost of living expenses in order to kind of get them through going back to school before they enter the workforce again. Now that made what might have been a difficult financial decision a lot more feasible for a lot of people. It also created a pretty big pool of federal money that universities were very keen to dive into.

**Sarah Holder** (4:30)
When the Great Recession hit, just a couple of years later, many workers opted to wait out the bad job market by going back to school, hoping both the economy and their job prospects would be better once they had a master's. Schools responded to this new demand for the degrees by creating new master's programs.

**Liam Knox** (4:50)
It wasn't just the major research universities multiplying their offerings. It was also liberal arts colleges becoming universities that had graduate schools. And that trend continued in part because the number of traditional undergraduate students, 18-year-olds coming out of high school going to college, started to decline at around the same time.