Pearls of Wisdom: Should You Pursue a Graduate Degree?
Many people consider going to graduate school, but fewer actually do. Daunted by the variety of options for pursuing a graduate education, they become overwhelmed, or start to doubt whether a higher degree is worth the cost in time and money.
A graduate degree has many benefits, both tangible (increased salary and career options) and intangible (sense of accomplishment). More employers are seeking candidates with master’s and PhDs, and jobs that require higher education are expected to grow 16-18% over the next decade, according to the Bureau of Labor Statistics. Is grad school right for you? Here are some thoughts to keep in mind:
Research programs and find one that fits your needs
Unless you are studying law or medicine, finding a program that fits your calendar and your budget is more important than attending a prestigious university. Ask yourself, “Will I learn what I need here?”
Estimate your costs accurately
Once you’ve settled on a school, estimate how much it will cost while you attend – include tuition, fees, books and regular household expenses. After you’ve completed an application, the institution will tell you how much financial assistance to expect. Subtract any scholarships, grants, fellowships or assistantships to arrive at your anticipated net out-of-pocket cost for attendance.
Determine how you will cover your net costs
Try to get some school-based funding—there might be more financial help than you think. Other funding sources include federal financial aid, taking withdrawals from savings plans (such as a 529 college savings account, IRA or Roth IRA) or borrowing from a 401k or 403b plan. Check to see if you have a tuition reimbursement program available through your employer. Lastly, you may qualify for a tax deduction or credit if you pay for college costs out of pocket.
Evaluate the return on investment
Ask the hard question: “Is graduate school necessary?”
After determining your net costs, how much debt you might acquire and how much savings you will consume, do a cost-benefit analysis. For example, if your degree costs $60,000, and you expect your annual salary to increase $15,000, you could pay off your costs in four years.
When taking costs into consideration, remember to include the salary and retirement savings you may forego while in school. Having an accurate idea of future income is important, too, so be sure to verify any job placement statistics and salaries from prospective grad schools. The other thing to weigh is whether solid job experience is more valuable for the career path you’re pursuing than an advanced degree.
Developing a plan to fund graduate school is complicated because of the many options available, and every situation and needs are unique. If this is something you’ve contemplated, talk with your planner about the pros and cons of making an educational investment in yourself.
Written By Kimberly S. Baker, CFP®