Knowledge is priceless — until you have a student loan to pay off. So should you go to grad school, or should you wait?
I’m currently attending grad school myself. Trust me when I say I understand how daunting the prospect of paying to spend another year out of the workforce can be. But given that my degree is in finance, I thought to consider it like I would a potential investment. Ultimately providing me with the assurance that my decision-making process was sound.
Like any investment, you should expect a return from going to grad school. Assessing said return will help you in making your choice. Grad school’s benefits aren’t purely financial and numerically measurable, so your assessment won’t be entirely black and white. You won’t be able to solely rely on a required rate of return when experiences don’t have a monetary value.
You can make the decision process easier by breaking it down as follows.
Looking back at your college years and reminiscing on the good old days might be spurring your decision to consider grad school. Or maybe the potential career prospects are calling to you. Whatever reasons you may have, you need to be crystal clear on them to make an informed decision on whether or not its worth it for you.
Going back to school because you don’t know what to do with your life isn’t a wise choice. By listing out why you might want to return alongside the reasons you wouldn’t want to go back, you can properly weigh out the pros and cons. There are going to be opportunity costs by attending grad school; you can’t forget these.
You have to consider factors like the length of your degree — what advances could you make in your career in the time it takes to get your MBA? How will studying affect your social life? For every reason to go, there’s a reason not to.
Weigh both sides of the equation before you start to consider the costs. At least then you can look at the costs with a more objective lens. If it’s clear that you benefit more from going to grad school, then you can actually justify the costs. If you don’t have a clear reason to go, then the cost will never seem worth it.
If you do find yourself with more pros than cons, then it’s time to explore your options. Different programs will have different results, where you choose to study will offer different benefits.
Don’t be afraid to reach out to other graduates — ask them about their experiences, what made their degree worth it. A quick search on LinkedIn can connect you with thousands of graduates with degrees in your field.
And even if, for whatever reason, you can’t get in contact with these people, you’re still able to stalk their profile. You can see where they’re working, their achievements during their studies — any little details that might help you decide what program is right for you.
You may discover potential scholarships or work experience opportunities by reaching out to others. Where you decide to study matters just as much as your decision to go back to education. It deserves the same amount of thought and consideration.
Once you’ve chosen your program and you know why you want it, you can start to calculate the costs — decide if it’s financially worth it.
To calculate the return on your investment, you need to know the real cost of your degree. The advertised cost is not necessarily what you will be paying. Any financial aid you receive, depending on its nature, will need to be paid back. Living expenses, textbooks, travel costs, potential tutors — there’s always going to be additional costs. Although it may be difficult to gauge these expenses, they can’t be disregarded. You can find estimates by researching online — they may not be accurate, but they’ll provide a better indicator of what you’ll be paying for your degree.
When you know the real cost, you can estimate the debt you’ll be left with. By assessing your potential future earnings with sites like Glassdoor and Payscale, you can see how long it will take you to pay off your loans. However, as this is a graduate degree, you also have to consider your undergraduate debt.
According to Mark Kantrowitz, a nationally recognized expert on student loans and VP of Research of Savingforcollege.com, you’ll struggle to pay your costs if they’re higher than your projected starting salary. If your undergraduate debt combined with your graduate debt is more than your first-year salary, you’re likely paying too much.
Kantrowitz also suggests as a general rule of thumb that if you can’t pay off your debt in 10 years, then it’s too much. As your salary will likely increase over these 10 years, this should also be taken into account. Surveys suggest that the average annual raise is about 3%. However, you may want to research your specific area of work to get a more accurate estimate.
With all of this information compiled, you can calculate your return on investment by comparing your lifetime earnings with a graduate degree to your lifetime earnings without one. This can be done using a spreadsheet listing your future earnings without a graduate degree (including annual pay raises) next to your future earnings with a graduate degree (also considering raises). Find the difference between the two and subtract the total cost of debt — this will result in your net return for attending grad school. You can turn this into a percentage by dividing it by your graduate debt and multiplying it by 100.
Compare this percentage to your required rate of return, a figure that is entirely personal to you, and decide then if the extra education is worth the extra expenses.
Having weighed out the pros and cons, found the best course and calculated the return on your investment, you can make a reliable decision on whether or not grad school is worth it for you.
Your required return is up to you. Even if your calculated return doesn’t meet that requirement, you’re still justified in going for it. When you’re making your decision look at the overall picture that you’ve painted with your research. I can’t stress it enough — there’s no clear answer to whether grad school is worth it. It will open doors for some, while for others, experience is worth far more than the degree.
However, with the information you acquired following the above process, some form of clarity can be provided, and you can sit comfortably knowing your decision an informed one.
Even though I’m still finishing my degree, I’m confident I made the right choice. The opportunities I’ve already received and will receive in the future are enough to compensate for any cost. And that’s not to mention the personal growth I’ve experienced during my studies.
I don’t have any regrets. There were other courses I could’ve taken. I was offered some good jobs when I graduated. But from where I stand now, I’m confident that returning to education was a wise investment. And if you assess your situation thoroughly, it could be the perfect investment for you too.