Guidelines for Whether Graduate School Will Pay Off . . . and the Massive Debt Involved
Graduate school is a high-risk, high-cost crap shoot.
This article appeared on the SmartMoney site (January 30, 2007).
Click through for the charts on expected earnings and costs for various degrees.
Here are some highlights.
. . . Many college graduates and working adults believe in the money-making powers of advanced degrees. And generally speaking, the statistics clearly support that: In 2005 the median earnings of a person with a graduate or professional degree topped $57,600, according to the U.S. Census, compared with a median $44,000 for people with bachelor's degrees.
But what these statistics won't tell you -- and graduate schools certainly won't bring up in their admissions brochures -- are the stories of countless graduates whose advanced-degree diplomas have left them worse off financially than when they started.
"I have some clients who are nearing retirement age and are still paying off student loans," says June Walbert, a certified financial planner (CFP) with USAA, a financial-services company that caters to military personnel. "In many cases, these people are sorry they took on that debt because it's lasted their whole lives."
Graduate school, after all, comes at a cost. The average graduate student borrows $37,000 in student loans, according to FinAid.org, a financial aid resource; $42,000 if you count undergraduate debt. . . . Now throw in an average $7,800 in credit-card debt, according to the latest study from education lender Nellie Mae. The result: Many graduate students enter the work force owing $50,000 or more.
To be fair, fifty grand probably isn't too onerous for those who pursue degrees in high-paying professions from top-notch institutions. The average law student may graduate with more than $81,000 in debt, according to FinAid.org, but once out of law school, she'll go on to earn an average $101,000 (according to the Census). Medical students graduate with nearly $126,000 in debt, but earn an average $113,000 a year as doctors. Business-school grads leave school owing $42,000, but get jobs that start at $92,000 a year, according to the Graduate Management Admissions Council, or GMAC.
Questions to Ask Before Enrolling
Here are three questions that may help you determine if it makes sense for you.
1. Is the degree required for the job of your dreams? If so, borrowing makes sense, says Rob Bennet, author of "Passion Saving."2. Are you going back to school for a career change? Make sure your new career is something you'll love, says human resources expert Roberta Chinsky Matuson. Otherwise, you may find yourself paying for an extremely expensive detour. If you're not sure, try working in the field -- even in an unpaid internship -- to make sure you're committed to it.
3. How will you pay for it? Unless you have a generous relative to pay up, be sure to ask your employer if they can cover at least part of your tuition expenses.
4. How much will you borrow? The general rule is that your total student-loan debt (including undergraduate loans) shouldn't exceed the starting salary you expect to earn after you graduate, according to Mark Kantrowitz, founder of FinAid.org. . . .
But for graduate degrees in low-paying fields, the price may not be worth paying -- particularly if you're after a job you could get by simply remaining in the work force. . . .