Hi, have been working in the states for 2 years now on H1B visa, however am thinking to start working on my master degree. Do I need to leave the country in order to change my visa status from H1B to f1? Also, is it true that the "priority date" in the process of green card is not applicable to High degree holders (master, ph.d)?

You can file for change of status to F-1 while in US but if you leave the country, even for holidays, you will have to re-apply for F-1 at any US consulate or you won't be allowed to enter US again.