Is Graduate School Financially Sensible for You?

Photo courtesy of Boston University School of Public Health

Here at The Thrifty Scholar, we pride ourselves in stepping back and examining pursuing higher education from various financial and career standpoints (see our last articles on Free education and Graduate school: A Refuge from the Recession?". We were happy to see that LearnVest did the same in their article, "The Rising Cost of Graduate School." Since graduate school tuition is on the rise, and limited funding opportunities to study become more and more competitive, it is even more important to assess the practicality of graduate school for each individual.


The article can be broken down into 5 main components:

1. WHY do you want to go?

First and foremost, why are you going to pursue this degree? Is it a good fit with your long term professional goals, family values, and other personal hobbies that make you happy? Is this degree required to practice in your field of choice (medicine, law, psychology), or are you primarily going for networking purposes?  Maybe you are looking to gain new skill sets. It's important to have concrete goals in mind before entering a graduate degree program.


2. HOW will you pay for it?

Employer sponsored tuition remission programs still exist, but they are drying up as more companies cut back on these benefits in order to cut costs. Working for the university in which you wish to take classes from might be a good option for those looking to gain the most tuition remission. However, most of these employment-tuition deals require you to work full-time and the go to school part-time. This might extend the total time it takes to complete your degree. Also, your job comes first and foremost, school will probably have to come second.

Compare programs and tuition rates available through USNews.com and PrincetonReview.com. Make sure to schedule appointments to speak with admission representatives and financial aid counselors on various merit-based and need-based funding opportunities.

Actively search for external (FastWeb.com and FinAid.org) and internal scholarship awards and grants.Keep applying throughout the academic year for money that can be used for tuition, room, board, books, travel related to educational conferences, and other school-related expenses.

3. WHAT are the hidden costs?

Another thing to consider, is that if you attend school full-time you will be paying for your living expenses with no substantial income. Taking out loans will probably be necessary for most readers, but you want to minimize the amount of interest you are paying. Interest, after all, is just money the people who are lending you the principal amount are skimming off of you. To tightwads like us, paying interest is like throwing money away.

Always try to take out loans that won't accrue interest while you are in school. These include Perkins loans, University loans, and Subsidized Stafford Loans, which are loans that the university or federal government pays interest for while you are attending school. For all loans, use the Finaid.org loan calculators to calculate repayment periods, and the total amount a loan will cost you over the years.

While you are in school full-time, you will be unable to contribute to your retirement accounts.

4. WHAT is your future earning potential?

Utilize your school's alumni network to talk to people in the field you are interested in. Don't be afraid to ask them what the average salary is in the field, or where you can obtain that information from. Compare this information to tools like Salary.com.  Get insider information on what skill sets pay off the highest dividends.

It might not make financial sense to enter a field which is projected to have bleak job prospects, or one in which the salary is roughly the same for both Bachelors and Masters degree holders.

5. WHAT is your ROI (Return on Investment)?

Ultimately, multiple factors will go into your final decision to pay for graduate school. Take the time to think about this from every angle, create spreadsheets, and work the numbers out. We wish you the best of luck!