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By the time they finish up their education, the typical graduate student who took out loans to fund their undergraduate and graduate degrees will owe around $45,000 in student loan debt. This is just the median – many students, especially those who pursue degrees in medicine and health sciences, rack up much more, often accumulating debt that exceeds $100,000.

On average, those with advanced degrees see higher lifetime earnings than those who only possess a bachelor’s degree. However, this doesn’t mean that going to graduate school is a surefire way to make a ton of money. In many fields, having a graduate degree has a negligible effect on your earnings potential.

More college grads than ever are making the choice to continue their educations and earn an advanced degree in their fields of study. Many of them are also accruing crippling amounts of debt, only to be spit out into a job market that has not been able to meet their income expectations and forced to take jobs they’re overqualified for (the underemployment rate – defined in this case as the number of college graduates working in jobs that typically do not require a college degree – is 34%).

All this has led to one of the more recent debates surrounding higher education: Is it financially worth it to go to graduate school?

A Risky Investment?

Let’s take a look at graduate school through the lens of it being an investment. With investments, you look at the success of them through your return on investment, or ROI. Graduate school would be considered a good investment if it provides a decent ROI, which in this case would be your lifetime earnings potential compared with the amount you’ll spend on debt.

Ideally, if you get a graduate degree, it will end up paying for itself and then some over a lifetime of work. Unfortunately, this isn’t always the case. An increasing number of fields prefer new hires to possess graduate degrees but aren’t offering enough money to offset the cost of funding the expensive education they’re asking for. This, combined with rising tuition costs, can create a big problem for recent grads who end up with a lot of debt and limited means to pay for it.

This can make the decision to go to graduate school a risky one. You could receive your degree and find that it significantly boosts your earnings. Alternatively, you could end up making about the same amount as someone in your field with a bachelor’s degree (or less). This is why it’s important to do research on the degree you plan on getting before you take out a big loan to cover it.

What Does It Actually Cost?

Graduate school will cost around $30,000 – $40,000 per year on average, though this will vary depending on what school you go to and the program you’re in. Most master’s degree programs take around two years to complete. Professional degrees, such as those required to practice medicine or law, usually take longer.

There are various ways to get help paying for a graduate degree, including federal aid, scholarships, grants or even tuition assistance programs through your employer.

When you’re looking at the cost of graduate school, you should consider not just the cost of tuition, but the opportunity cost.

Opportunity cost is what you give up when you choose one path over another. When it comes to graduate school, the opportunity cost of choosing to attend would be the income you would otherwise earn if you were working full time instead of attending school. Assuming you already have a bachelor’s degree, this could be around $50,000 per year that you’re missing out on.

Something else to think about is the cost of putting certain goals off to attend graduate school. If one of your long-term goals is to build a solid retirement fund, entering the workforce right after your undergrad could be a better choice because it allows you to start earning money that can be tucked away into a retirement account, where it will earn interest. If you go to graduate school and graduate with a lot of debt, you’ll probably have to forgo saving for retirement for at least a few years, which can have a significant impact on your savings. Because of compounding interest, delaying saving for retirement can cause you to miss out on a lot of growth. If you’re considering graduate school, you need to understand how likely it is that a graduate degree will raise your earnings potential enough to make up for that lost time.

When It’s Worth It

There are certain fields that you’ll have to get an advanced degree to work in. Doctors and lawyers fall under this category. Fortunately, these fields also tend to be more lucrative, and degree-holders in these fields tend to see a good ROI. (However, it’s important to note that nothing is a sure thing, and you shouldn’t pick a career path solely based on the amount of money you might make.)

There’s a lot of debate over whether an MBA is necessary to go into business. If you’re going to a top school where you’ll be able to make a lot of vital connections and have access to a large network of alumni, that can make it worthwhile. It can also be worth it if you’re already working for an organization that helps to cover tuition and you’re certain your master’s degree will make you eligible for a salary boost.

Conventional wisdom states that people who hold advanced degrees make more money than their bachelor’s-holding counterparts. However, the difference varies pretty dramatically among majors. Computer science majors could potentially see an almost $20,000 salary boost by getting their master’s, while other majors may only see a modest boost in earnings.

Other areas where a graduate degree might be a good investment include economics, chemistry and electrical engineering.

And When It’s Not

While the computer science major above might be highly motivated to pursue their master’s in hopes of achieving a higher earnings potential, an English major who might only see an average salary increase of around $2,000 might not find that graduate school is worth it, especially if they’re looking to go to an expensive private school that would have them stuck paying hefty loan payments for the majority of their adult life.

Even the educational paths people might stereotypically think are sure bets to making lots of money, like law school, don’t always end up delivering. Many law school grads – particularly those who don’t attend top-tier schools – find themselves underemployed and with more than $100,000 in debt.

Your potential debt is something that you should spend some time thinking seriously about, even if you’re going into a lucrative field. If you have to borrow large sums of money to afford graduate school, you might find it’s not as easy to pay off with that new, high-paying job as you had thought it would be. And that’s if you’re even able to get that high-paying job right out of the gate. If it takes you a while to establish yourself in your field and start earning what you’d hope you would, you could end up struggling to make your loan payments.

How to Figure Out Your Potential ROI

The decision of whether or not to attend graduate school might feel like one that requires a lot of soul-searching and gut-checking. While that is part of it, a lot of the deciding factors are things that can – and should – be quantified. Taking the time to do your research and actually crunch the numbers of what your ROI might look like if you choose to go to graduate school will help you avoid spending a lot of money on an expensive degree that doesn’t help you that much once you’re out in the “real world.”

Research the field you want to go into and find out the typical career path of the people who do what you want to do. Find out what the typical salary difference between a bachelor’s and a master’s is for your major. Are you more likely to find work with a master’s? How long will your degree take?

Some statistics you might find helpful to look at are the projected growth rate and the median starting and mid-career salaries for the field you want to go into. The median salaries for your major will tell you what you can expect to make right out of school and give you a glimpse into what you might be making later on in your career. The projected growth rate is also important, as fields with lower growth might not have the space to accommodate recent graduates, making it more likely you’ll end up underemployed.

Check out sites like Glassdoor or PayScale to get an idea of what companies are paying people with your experience and education. The Bureau of Labor Statistics also provides a lot of useful info on pay and outlook for many different occupations.

Calculate what your debt situation is going to look like when you graduate, including any debts you’ve accrued from your undergrad. What will your monthly payments look like? Will you be able to afford them?

You should also do research on what kind of background is preferred in your desired field. While many fields highly value advanced degrees, a lot of employers prefer practical experience through internships or years in the workforce over formal education. Find out which is generally true for your field.

Do you plan on working in a field that requires you to do a lot of networking and have a lot of connections? If you go to a top school that provides a lot of opportunities for expanding your network, that’s a vital but hard-to-measure benefit of attending graduate school.

Your ROI can depend heavily on what school you go to. A more well-known, prestigious institution will have a wider network of alumni and tend to look more impressive on your resume than a smaller, local school. However, that’s not to say you need to suck it up and pay the price of a flashy, private university. Many larger state schools have graduate programs that are just as prestigious as their private counterparts, offered at a lower cost.

Figuring out whether graduate school is worth it isn’t all dollars and cents. There will likely be non-financial sacrifices you’ll have to make that you should consider as a part of this equation.

Think about any goals you want to work toward. Many people who go to graduate school end up having to delay many of life’s big milestones, including homeownership, marriage or having children. Is this something you’re willing to do?

Should You Go?

After considering everything, consult your gut to figure out why you really want to go. If you’re having trouble figuring out what you want to do, and feel that graduate school might help provide you with some certainty, or if you think it’s a one-way ticket to a high-paying job, you should think twice. If you’ve looked over all the information you gathered and think it would be a good career move that you can afford to make, then it’s worth considering.

If what you want to do requires an advanced degree, you may think your decision is pretty much made for you. However, you should still do your due diligence and check out what type of financial situation you can expect to be facing once you graduate, to ensure that you’re aware of the realities of getting a graduate degree and don’t end up disillusioned and in debt down the road.

If you think graduate school might be a good idea but aren’t 100% sure, you might consider taking time off between your bachelor’s degree and your master’s degree and getting a job in your field. Not only will you be gaining useful work experience while you make your decision, but you’ll be able to start saving some money, paying off undergrad debt and building an emergency savings, which may end up helping out big time if you do decide to go to graduate school.

Alternatives to Graduate school

If you want to further your education in your field but can’t get past the price tag that comes with a graduate education, consider some alternatives.

If you’re already working, find out if your company offers tuition reimbursement programs for employees who continue to work while going to school part-time. Even if you don’t get tuition assistance, doing a part-time gradudate program while working can be easier on you financially while having the benefit of not taking you out of the workforce for two or more years.

If you’re thinking about going to graduate school because you’re trying to switch fields, consider applying for internships in the field you want to transition into.

If you need more experience in a specific skill area, look into getting a graduate certificate or participating in a workshop. Graduate certificates cost less and take less time than a degree while offering an educational boost that could make you a more attractive candidate to companies. Workshops or boot camps that cover topics like coding can be a great way to hone your skills and gain practical experience in a specific area.

While a graduate education can provide a lot of value and ROI, if you’re not in a line of work that requires an advanced degree, there are plenty of ways to continue your education and make yourself a more marketable candidate without spending tens of thousands of dollars on a degree that may or may not provide a worthy ROI.

What do you think? Is graduate school worth the cost? Share your thoughts in the comments!

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