Is a Graduate Degree Worth It?

John Schneider

The only thing better than bigger is more, right?

Depending on what we’re talking about this is arguably true.

When talking about a pint of Ben & Jerry’s with a dose of Golden Girls, more is better.

When talking about the housing bubble, student loan bubble, and Taco Bell, not so much.

Moar student loans? Maybe not better.

College tuition has been on a steady increase since the 1990s, and college graduates are graduating with more debt than ever. Between 2008 and 2012, the number of students to graduate with debt increased from 1.1 million to 1.3 million.

Too often now, college students graduate with a mountain of debt. They’re forced to move back home with mom and dad and take a job with pay not commensurate with their student loans. Many graduates are underemployed and are seeking a better future.

The daughter of a good friend of mine recently graduated with $100,000 in student loans with a degree in social work from a premier college in a major city. She moved back to her small hometown and took the first job she could get because she was afraid not to have money to pay her student loans. She currently earns $13 per hour. She’s now considering graduate school to increase her opportunities because her big city degree is too expensive for her little city job.

For many, the logical next step is to either kill time or make a better future is to get their graduate degree. This, often, requires taking on more student loans – and the cycle continues.

Is a graduate degree worth it?

As with any investment, one must look at the potential return on that investment. About 70% of undergraduates already have about $30,000 of student loans to repay. The cost for graduate school on the low end for public colleges is another $30,000.

Will $60,000 in student loans do for a student what $30,000 can’t?

One way to evaluate the return on investment (ROI) of a graduate degree is to look at the potential increase from a salary with an undergraduate degree to a salary after a graduate degree.

Considering that many employers pay employees just enough to get them to stay and that wages have been stagnant for decades, there’s a good chance a salary increase won’t help you pay off your student loans faster.

The second way to evaluate the ROI of a graduate degree is to compare the maximum salary potential with an undergraduate degree and the maximum salary potential with a graduate degree.

For this method, a 2015 study done by SoFi that compared the ROI of earning different graduate degrees based on wage increases for each of the first 10 years after graduation from graduate school may help.

It’s also important to determine if you have the stamina to complete a graduate program when your primary driver is income. The benefits of credits obtained for graduate degrees are reduced when the graduate program isn’t finished.

How can you keep your cost low if you must go?

If graduate school is in your future, it helps to lower your costs of school. If you’re considering graduate school and already have student loan debt from undergraduate school, you’ve likely exhausted all education savings and gift accounts, such as 529 Plans and Uniform Gift to Minor Accounts. However, it may help to find out if you have relatives or even friends with money in 529 Plans that aren’t completely used.

One benefit of 529 Plans is that they may be transferred to another beneficiary if the original beneficiary doesn’t pursue a higher education or doesn’t use all the money in their 529 Savings Plan.

It’s also helpful to exhaust grants and scholarships offered by the federal government, state governments, and schools.

Research www.grants.gov and apply for grants that are appropriate for you. You’re likely already familiar with FAFSA (Free Application for Federal Student Aid). Complete an application at www.fafsa.ed.gov to apply for federal student loan assistance authorized under Title IV of the Higher Education Act of 1965 to help subsidize your graduate degree.

Title IV of the Higher Education Act of 1965 covers Pell Grants, Supplemental Educational Opportunity Grants, and the Federal TEACH Grant, along with other grants, loans, and work-study programs. Research www.ed.gov to find additional grants for which you may qualify. Simple ways to search grants and scholarships available through your state are through your state’s Department of Education or state grant agency website or with Scholarships.com.

Get that (scholarship) paper.

A trick to get the most money available through grants and scholarships is to be a bottom feeder.

Most people shoot for the higher, five-figure grants and scholarships. The competition for these higher-dollar grants and scholarships is stiffer. Fewer people apply for lower dollar scholarships and grants, which makes them relatively easier to win.

By creating systems and standard responses that just need to be nuanced from application to application, acquiring the lower dollar grants and scholarships may be your best strategy for keeping your costs low.

Get your employer to invest in you.

Finally, get an employer to pay for all or some of your graduate degree. If you’re currently employed, contact your human resource department to determine how your employer may be able to assist. Reimbursement usually covers up to a certain dollar amount in each year and doesn’t require repayment. It does typically require that the student meet a minimum GPA.

Tuition reimbursements over $5,250 a year may generate a tax payment for the employee. This will likely require that you work full-time and go to school part-time and will take you longer to complete graduate school, but it will mean less student loan debt for you.

If you aren’t currently working for an employer that offers tuition reimbursement, consider finding a job with a company that does. UPS, Home Depot, Starbucks, and Apple have businesses in most parts of the country and all offer excellent incentives, including tuition reimbursement.

It may be that more is better for your situation. If so, be strategic with how you get more because at some point it may get cost-prohibitive. It may be that more school isn’t necessary if you’re creative or strategic with your career planning. Don’t get so wrapped up in the “more mentality” that you don’t see this.

Have you gone back to school? Did it work for you? Or was it an unnecessary expense? Join the conversation in the #Adulting Facebook community.