In the past I've posted about The Value of an Education, The Value of an MBA, and Is Your Degree Worth $1 Million -- or Worthless? -- all with the same basic message: getting a college education is a very smart financial move. It more than pays for itself (usually in a few years) and is one of the most important steps you can take to make sure your net worth grows throughout the years.
This is all great advice if you're 18 or younger, but what about people who are older, their career is selected, and their income die is cast? What are they supposed to do?
Well, there's always the value of continuing education as I noted in Almost Infinite Investment Return. And, of course, there's always going back to school to get a degree (or another degree) or going at night. However, that's not easy to do and the payoff is questionable. Or is it?
Here's an article from Money Central where the author's husband decided to go back to school to get a degree. Let's set the scene with her take on the issues surrounding such a decision:
I simply hadn't wanted to face the fact that, while changing careers may yield a better salary and lifestyle down the line, the upfront costs of that additional degree are daunting.
In addition to digging up thousands of dollars to pay for tuition, books and fees, you also have to factor into your grad-school equation:
- how to replace the loss of income
- how it will change your lifestyle
- how much it might cost to relocate
- how much student loans would cost over the long term
- how to resist the temptation to go deep into credit-card debt
- how you'll handle years and years of eating beans
Yes, there are these issues (and probably more).
The author then struggles with these and other issues as she seeks to determine what is required to make this work financially.
Here are my thoughts on this issue:
1. Before you go back to school so that you can make a better income (if that is your reason), be sure to do the math. It's relatively easy to calculate what it will cost you and how much more you'll make as a result.
2. If you can, try to keep you job and go at night/weekends. I know this will take longer and is tough on you and your family, but if you really want to make a change and/or earn more, you can make the decision that it's worth it.
3. Be sure you go to the right school. An MBA from the local no-name college is not the same as an MBA from Harvard. I've seen many people get an advanced degree from schools that weren't that great just to keep the same job they had when they started the process. Be sure you know who recruits/hires at your school, what they pay, etc. before you decide to go there.
4. While you don't want a no-name school, Harvard isn't necessary either. I went to a "top-25" business school and ended up with the same job that people from Harvard, Wharton, and Stanford had. The difference? They had $75,000 in debt -- I had $5,000.
5. Note to the article author: You better make sure your husband REALLY wants to do this and/or REALLY loves it if he can earn more now tending bar and freelancing then he'll be able to once he gets his degree.
Here's a different approach to the same issue, but a different question. What is the true benefit of changing careers? This is something I'm digging into. Thanks to voters in California who proved that they really didn't want to reform the state in the latest election, it is still possible to get granted tenure as a teacher after 2 years. Why would I want to do that? Because after 5 years service, my spouse and I would have all our medical expenses taken care of for the rest of our lives.
Read that last sentence again and see if it doesn't floor you as much as it did me. So going back to school to get a teacher's certificate at 50 (for example) would save an incredible amount of money at my retirement. Focusing on high-demand teaching positions, like math or science which I both deal in, should make it easy to find a job.
Trust me, I'm looking at this very closely. The cut in job pay for teaching could pay off handsomely in the long run for the benefits.
Posted by: Chrees | December 07, 2005 at 12:03 AM