According to the U.S Census Bureau, 13.1% of adults over 25 have a master’s degree or a doctorate degree. Attaining advanced degrees has become a larger trend over the last 10 years, securing people with better jobs and different career opportunities.
Advanced degrees can provide students with the opportunity to study a subject they are passionate about, gain productive experiences, and prepare them for future career endeavors.
However, if an advanced degree is something you’re pursuing (or thinking about), it’s important to make sure you’re very aware of the tradeoffs.
Class Is In Session: The Benefits of an Advanced Degree
Going back to school to continue your education can have a hugely positive impact on your life and your career. Financially, it’s been shown that individuals with a graduate degree tend to earn more than those with an undergraduate degree in similar positions and industries. Taking it a step further, individuals with a doctorate or professional degree can earn up to $20,000-30,000 more. Although these numbers are often motivation enough for people to go back to school, there are countless non-financial benefits to continuing your education, as well.
#1: Increasing industry know-how.
Earning your master’s degree or doctorate is essentially become a niche expert. It is vital in today’s marketplace. It’s the only way to substantively differentiate yourself from the competition without having to become a gifted salesperson.
#2: Improve job prospects.
Even if you love your current role, continuing your education can open you up to even more opportunities that could mean higher income, better benefits, or even just more enjoyable job perks – like a closer commute, or a better work environment. Having an advanced degree alone can open those doors, and make you a more qualified candidate for opportunities you apply for.
#3: Switch careers.
Maybe you’re actually interested in switching careers, rather than just advancing in your current role. Pursuing continuing education might mean digging into a specialization within your field – or in an adjacent field that you’re really interested in.
#4: Growing personally.
Maybe you just love learning, so going back to school is more about your own personal growth – and that’s awesome! Just make sure that it’s a financially responsible decision for you and your family, and that spending the money on an advanced degree will align with your values. For example, if you value education, or focusing on self-improvement, going back to school may be a great fit.
There are many reasons that people pursue more education, most concerning career advancement. While many people want to acquire advanced knowledge in their chosen field, the cost often holds them back – and that’s just one reason an advanced degree might not be a great fit. Let’s talk about some of the drawbacks that come with continuing your education.
The Tradeoffs To Be Aware Of
The cost of education continues to skyrocket, and there are no signs of prices leveling off anytime soon. A traditional four-year degree program leaves many students swimming in debt, let alone an advanced degree.
The average cost of a master’s degree, for example, ranges anywhere from $30,000-$40,000 a year. A program’s cost will depend on many factors: the school, the specific program, and the time to complete the program. The financial drawbacks of earning a master’s degree or doctorate can be big – especially if you’re self-funding your education.
Whether you’re paying out of pocket as you go, using cash savings, or leveraging employee stock options or a lump-sum windfall to pay your tuition – you’re putting up a big sum of money that could be used for other financial goals (like retirement).
The initial financial hit that your advanced degree takes on your finances is huge, but what’s even more daunting are some of the other lifestyle drawbacks. Earning your advanced degree takes time, and can be a huge stressor – especially if you’re balancing your education with a full-time job, growing your career, and a family.
Is It Right For You?
If you’re wondering whether an advanced degree is worth it for you, there are a few things to consider. Running through a few questions can help you plan ahead.
#1: Is this a good financial move?
If you’re thinking about an advanced degree, it’s in your best interest to avoid student loans. If you can pull it off without taking on any debt, that’s the way to go. However, even if you’re thinking of taking the plunge and taking out loans, you still need to protect yourself financially before enrolling.
A good rule of thumb to follow is that your total college costs should be no more than 2x your annual income. So, if your total college costs were $150,000, your first job should have an all-in compensation of at least $75,000 a year. This helps you to determine whether or not you’re able to pay off your education if you were to take off loans. However, it’s also a good guide to determine whether or not your education is going to quickly “pay back” what it’s worth and then some. You want your advanced degree to work for you.
#2: How am I paying for this?
It is important to do some research into the cost of the programs you are interested in to see how you will be able to pay for it. Like a four-year bachelor’s degree program, there are many ways to fund advanced degrees:
- Personal savings
- Student loans
- Financial Aid
Some master’s degrees can be fully-funded while others don’t offer any institutional financial support. Each program will have tuition information listed on their website, so consult that to get the exact figures for your program. From there, you can determine how the advanced degree you want fits into your financial plan.
#3: What does earning my advanced degree look like?
Beyond the financial aspect of your degree, you need to think about the block-and-tackle planning of going back to school. A few questions to answer are:
- Where are the classes being taken?
- There is a big cost difference between in-person classes and online classes. The cost will also be affected by the tuition rate (in-state or out-of-state).
- What program are you enrolling in?
- The type of program you enroll in will have a significant effect on the cost. A nurse anesthetist program, for example, will probably be more expensive than an MBA due to time, labor, and material costs.
- What are the exit opportunities?
- What does the average graduate make when he or she finishes the program? What is the 10-year outcome for those who went into that program?
Move the Tassel
An advanced degree is an incredible way for you to make your mark on the world, but it’s not always the only way to increase your earning potential and advance your career. The #1 consideration before pursuing a master’s degree or doctorate should be how it’s going to impact your career, and whether or not that financial growth is worth pushing back your other financial goals. For example, spending the money on an advanced degree can push back some of your other long-term goals – such as retirement savings, or building your children’s education savings.
Although an advanced degree can be worthwhile, it’s wise to consult your financial planner before making any big decisions. Together, you can weigh the pros and cons of pursuing a master’s degree or a doctorate.
Have questions? Let’s talk! I’d love to help you build a plan around growing your earning potential, and see how an advanced degree fits into your strategy.