Will Grad School Pay Off?

Following my suggestion that the college degree is not dead, here's a piece that asks if a grad school degree will pay off. The basics of this article starts with details of a grad degree cost:

More than 70% of those who pursue a graduate degree find themselves saddled with debt that they may not be able to afford, according to the U.S. Department of Education's 2004 National Postsecondary Student Aid Study. On average, a person with a master's degree graduates with a combined undergrad and graduate debt of $32,858. For an MBA that figure is $41,687; for a Ph.D., plan on $53,405; and for a law degree, expect to be paying off $80,754.

Of course, there's a financial benefit to a grad degree as well:

The good news is that, on average, people with graduate degrees make more money than those without. According to the most recent U.S. Census figures, a person with a professional degree (law, medicine, business) will make, on average, $4.4 million over their lifetime, in today's dollars. That's more than twice the $2.1 million a person with a bachelor's can expect to earn. Even a master's degree will bring, on average, $2.5 million over your working life; a Ph.D. will pull in $3.4 million over the average career span of 40 years.

And what I see as the key point -- the intersection of cost and higher pay:

But the grad-school-payoff potential can vary widely by chosen field -- and a master's in French literature isn't going to bring the same bang as an MBA.

Exactly.

If you determine that you need a graduate degree to get where you want to go (and many people will NOT need one to achieve their goals), then you need to match the cost of the degree with the expected payout. I've said this before in posts like How to Get the Most Financially Out of College and Go to Law School Without Racking Up Tons of Debt (this isn't just for readers thinking about law school.) My words there are worth repeating:

"The point is that you need to look at a college degree (including a law school degree) as an investment. What will it cost and what will you get out of it? Look at the best way to maximize this investment, and you'll be able to find a school that meets your needs and won't leave you in a ton of debt relative to your income. Ignore these factors and select a school based on considerations like campus feel, nearness to home, the popularity of the football team, one great professor, and so on, and you may be setting yourself up for a bad financial decision."

For instance, consider the following:

• A professor who will make $50,000 per year who leaves college with $50,000 in debt.
• A businessperson who will make $90,000 per year who leaves college with $50,000 in debt.

Any question about who is in better shape to deal with their college debt (whether it be for an undergraduate or graduate degree)?

Comments

[Anni]

I continue to struggle with this issue, moreso because I am close to being debt free. Would a graduate degree and career move be worth the financial burden?

[plonkee]

I think it's misleading to say that you shouldn't consider fit. It's all about compromise, but there are often degrees that are at similar price points. And there's less point taking on any debt for a degree that you don't even finish because the place is a poor fit.

[Ed]

I personally cash flowed grad school. I worked full time..... watched my expenses.... dumped away as much cash as possible... and had the funds to foot the bill when tuition came due. Not only did working full time pay for school, but it put me FAR ahead of others that I graduated with….. sure they finished in 2 semesters and I took 3, but in most cases, the 24 year old out coming out of grad school with work experience is going to command a higher salary anyways…. At least I did.

I think people seem to forget that there are MANY reasonably priced state schools out there that offer excellent programs. In my experience, the people that I come across with a TON of student loan debt put more weight on pedigree than education…… Many also seem to think that the 4.0 they earned while at XYZ will help to pay off all the debt they have….. In my hiring experience, I would hire someone that worked there way through school and sports a 3.0-3.5 than a 4.0-er that did not work any day.

[Christopher]

I wrestled with this for a while, but ended up choosing to go back to school. My undergrad was in music (I earned a BM), which qualified me to do one of two things: teach pre college students or go to grad school. In the music world its relatively unrealistic to think you'll make a living performing, unless you're outstanding.

So a master's degree it is! The good news is that I have a sweet deal: grad assistantship which covers all tuition and fees and pays a stipend of about 700/month. You have to weigh the availability of GA positions into your equation too. If you can essentially do a degree for free, then why not?! I've already decided I'll apply for doctoral work for that very reason: it'll likely be free some place that's to an assistant position.

-CD

[Anonymous]

I got a scholarship and only took out $16,000 in loans for two years of graduate school.

Upon graduating, I landed a job which paid approximately $8500/yr more than my pre-grad school job, which I probably would have been laid off from in 4 months had I not gone to school.

I have been promoted in my industry and am now making 75% more than I was in summer of 2001, before I entered grad school.

[Mark Nelson]

So what are your thoughts on all the student loans for undergrad? Is it worth it for kids to go to college and borrow their way through? Or should they say nay and not go to college?

Tough decision for a lot of kids as college becomes more expensive and out of reach for many kids.

[ToughMoneyLove]

For a lot of recent college grads, MBA or law school seems to be the default landing spot for advanced education. Both of these have become cash cows for the education industry which is why more schools are starting programs. Be very wary of borrowing substantial sums for either of these. Most law grads are not making the money you think and certainly not enough to justify the debt. As for MBA's - well a lot of them are doing jobs for which a high school education is sufficient.

[rwh]

Adding up the cost of tuition and lost income it cost me 50k to go to graduate school 20 years ago. I don't make much more money now than if I had not earned an advanced degree, but my job in research is much more fullfilling than any job I had previously and my lifestyle is much easier and more free than most people I know.

If you're going to go to graduate school I think it's very important that it not just be about making more money; it should be about positioning yourself in a career that you will really enjoy. It makes life much easier.

[a]

I have so much to say about this topic I don't even know where to start. I'm in (and almost done with) grad school so this is an issue near and dear to my heart.

First, always consider the possibility of reaching your goal without more schooling. Also make sure that if you go back to school, you choose wisely and spend as little time there as possible.

Second, the article does a poor job in making the distinction between grad school and professional school. They are different and have different costs and payoffs.

You should think twice about going to a professional school unless you enjoy the subject matter.

You absolutely should NOT go to graduate school unless you simply can't imagine yourself doing anything else with your life. Grad school, as an experience, goes nowhere but down if you don't have a true and driving passion for it.

Other stuff to consider:

Professional School (business school, law school, med school etc.).
- You know what the tuition is.

- You know exactly how long the program takes.

- The programs can be difficult but are very doable. And every week, every test and every class completed is another step towards getting out.

- You know roughly what you will make when you get out.

- You should also have a good idea of what your chances of obtaining gainful employment with your new degree are. For the medical professions its basically 100%. Other areas such as law and business I can't comment on, since I'm not involved with them.

- Pretty simple cost/benefit analysis works well to determine if you should do this.

Graduate School
- In the sciences you usually get a stipend (its a complete joke, but better than nothing). You may still have to take out loans depending on where you are living. Most stipends do NOT match cost of living in any reasonable sense. You can live in the black in grad school (I did), but its difficult and highly dependent on local cost of living.

- In the humanities you pay through the nose unless you are one of the lucky few to get a scholarship.

- Graduate schools do NOT have a fixed end date. You may be there forever. Some people get done in 4 years. They are the rare ones. 5-7 years is more realistic for the sciences.

- Nothing in graduate school is fairly evaluated. In undergrad and professional programs you can grin and bear a bad class or rotation and struggle through. In grad school if committees or advisers decide that they don't like you, you may wind up being forced out of the program. I should also point out that the requirements for you to graduate will be totally different than those for another person. Requirements are all arbitrarily determined by your mentor, committee and paper reviewers.

- In grad school, unlike most other forms of education, hard work does NOT equal success and prompt graduation. Many research projects are dead ends. Many mentors do little to no mentoring and absolutely no one in grad school cares on anything more than a superficial level about the success or your project or your eventual graduation. Spending tremendous effort on go nowhere projects is basically the norm.

- Your chance of getting a job after grad school is probably not what you think it is. Your chance of making it to professor is low (under 20% for the sciences). Everyone will tell you how easy it is to get a post-doc afterwards, but these are not jobs. They are temporary, low paying (as in not much better than your grad school stipend) positions. It is also unlikely that you will ever advance beyond these positions.

- To reiterate, grad school is a poor decision unless you have a driving passion for the subject and absolutely can't see yourself being happy doing anything else.

[angie]

wow, such negativity in the post by "a"....

I'm about to begin grad school in a couple weeks...and I don't understand where this person is coming from, saying that in grad school its never-ending, you don't know how much tuition is, hard work doesn't mean much, etc.

I know exactly how much my tuition is, I know exactly what classes I have to take in order to graduate and how long each class is, and if you work hard at something, chances are you are going to be successful.

I guess I'm lucky because I don't have the concern of GETTING a job just because of a piece of paper, I already HAVE a good job and I think this will only help me in the long run.

[a]

I'm coming from the point of view of someone who went to and is almost done with grad school (PhD program). if you aren't in a PhD program, what I said won't apply to you. Professional schools are different and much better organized.

My negativity is from my personal experiences and those of people around me.

Grad school is never ending. Our student hand book has a section titled "year 3 through ..." The end point of a PhD program is determined by your adviser and your committee. The 7+ year student is not unheard of, we have several floating around here.

I never said I didn't know what the tuition was. I don't pay tuition, I get a stipend because I am in the sciences. I know exactly what the stipend is and its too small.

Hard work is meaningless in grad school. If you have a crappy project, it doesn't matter how many hours you put in. I spent one and a half years on a go-no-where research project. I put lots of effort in and had as much to show for it at the end as I did at the beginning. I finally had to change advisers to get out of it (not an easy thing to do). Many of my other friends just quit half way through the program (at the 2-3 year mark). Two people I know graduated after 7 years with zero publications. Two others graduated after 5 with zero publications.

Furthermore, hard work is meaningless because the standards are arbitrarily set. Why do some people get to leave with nothing published and others have to have multiple publications?

[Sed]

a,

Grad school can be like that. I did see people (in my program, even under the same advisor) end up with a 6-7 year PhD while I was out in 4.5 years. I pushed my advisor to define what I needed to do to finish, and then did that plus a little more. The point of a PhD is to learn how to think and become a scientist, it takes longer for some than others and that may seem arbitrary.

My best friend and his advisor were at war when he was finishing up (to the point where he had to go behind his advisor's back to schedule his defense) but the results spoke for themselves and he was able to graduate in 5 years. In grad school, it isn't the amount of work which shows that you are finished, it's the results.

To people starting out in grad school, you can avoid many problems by doing some research before starting.

1) get to know your potential advisor before signing on through talking with his current students, the advisor, and even doing a rotation through lab before choosing. (if you hear that no one has graduated in less that 6 years under him, don't place your expectation on graduating in 4)
2) once you decide, talk to your advisor about expectations (both yours and his) # pubs, years, etc...
3) keep him up to date with everything you are working on
4) impress him as early as possible so you'll get the good projects.
5) try to define your project so even a negative result is still publishable. This will keep you out of having a dead end project which sucks up 2 years with nothing to show for it.
6) agree on a checklist for graduation

good luck,
Sed

[a]

Sed gave some really good advice. Its all stuff that I wish I knew going into the program.

I take issue with the saying that the point of doing a PhD is training to think like and to be a scientist. I can't honestly say that I've been effectively trained to be a successful scientist. I've also met lots of technicians who are better scientists than post-docs. The point of PhD training is to get you into the PhD club that gets you taken seriously by other PhDs. That way you can compete for grants and professorships.

I would also add to the list above what I call the "three month rule." If you are not on a data generating project (any data generating project) three months after joining your adviser's lab then you should change labs.

[Sed]

There will always be PhDs who make you wonder if they got their degree off the back of a cereal box. And, there will always be the odd History B.A. who naturally has a better grasp of science than I'll ever get. However, getting into the PhD club will mean nothing if you can't think scientifically. You won't be able to get the grants/jobs/professorships without a reasonable mastery of the science expected with a PhD. It is just a piece of paper, but it is a pre-requisite for moving ahead. I'm sure you do have more of a scientific grasp thank you think you do if you are coming close to defending. The lessons aren't always obvious but unless your advisor is lacking, the training is there.

[kitty]

The article and "a" totally ignore graduate assistantships which not only make education free regardless of how expensive the school is, but pay a salary which may be small but is perfectly enough to live on. Graduate assistantships - both teaching and research are widely available in sciences and engineering. Some large schools have shortages of TAs. In early 80s, my assistantship was $450 a month the first year and $500 a month the following year (high inflation in these years), obviously in addition to tuition/fee waiver. Considering that a complete meal service with the university and a private room in a graduate dorm added up to about half of this amount, I had enough cash saved after the first year to take a trip to Hawaii (and still had money left).

Far from being too expensive, in some fields, graduate school is a nice way for a recent grad with good grades who is unlucky enough to graduate during bad economic times to survive until better times. Earning a salary, however small, while taking classes for free surely beats being unemployed while paying thousands for individual courses.

Also, it is not just about getting a PhD or doing research. An MS in CS, for example, is very helpful in getting a job in software R&D with a technology company rather than doing boring application programming in a bank. Guess which of these is better nowadays.

[Sarah]

"In the humanities you pay through the nose unless you are one of the lucky few to get a scholarship."

If you are paying for your humanities Ph.D., you are a fool. (Unless you don't need to worry about your career and are just stretching your brain, in which case, more power to you.)

If you aren't going to a program prestigious enough to support you, and which rates you highly enough to give you that support, your chances of finding a tenure-track job post-graduation--already low enough--are basically nonexistent. Do not be fooled.

[a]

Assistantships, or stipends as they are called in my institution, do make grad school essentially 'free.' But its not really free. There is opportunity cost to consider. You could have a real job paying twice as much or more. And you could be earning valuable work experience. Of course this assumes that career paths are available that don't require an advanced degree. It also assumes that you could be happy doing something other than academic research. If these assumptions aren't met (especially the one about happiness) then yes, you should definitely be in a PhD program.

Kitty raises a good point about the potential value of an MS. I won't comment on fields outside my own, but a masters in biological or biomedical sciences is only marginally useful depending on your career goals. If you want to be a lab tech its a great way to go. But if you want to get serious about academic research and have the ability to compete for grants and work independently, its doctorate or nothing.

[mady]

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