Hey everyone! Today I have a great post for you by Jen from Frugal-Millennial.com. Out of all the different college questions that I get from M$M readers, “Should I go to grad school?” is definitely one of the more common ones.
Millennials are in such a weird place where we've been told that college is the only way to go if we want a good job, but then when we get out of school it seems like you need another degree just to compete! Jen took the grad school path and has some really solid points on why it may not be the answer for you. Enjoy! ~M$M
Since the recession began in 2008, applications to graduate schools and professional programs have skyrocketed. Many undergrads, concerned about the weak job market, enrolled in graduate school as a way to make themselves more marketable job candidates.
This may sound like a good idea if you’re a philosophy major whose only prior work experience involves waiting tables or whipping up Frappucinos, but going to graduate school often turns out to be mistake.
Here are four reasons why going to grad school may not be your best option:
1. More debt is not the answer to your debt problem.
Many undergrads, particularly those in liberal arts degree programs, worry about their ability to find a full-time job after graduation. To make matters worse, more than 2 out of 3 graduates have student loan debt, according to The White House.
Some students feel that they will not be able to find a job that pays well enough for them to be able to afford their monthly student loan payments.
In order to make themselves more appealing job candidates, they decide to attend graduate school. Unfortunately, this frequently leads to significantly more debt.
40% of the over $1 trillion dollars in student loan debt in the U.S. comes from graduate school and professional programs, according to a report from the New America Foundation. While an advanced degree may increase earning potential in some cases, the income boost may not be enough to justify taking on massive amounts of debt.
2. Statistics can be misleading.
Schools often lure students in with statistics that paint an incomplete picture. When I decided to pursue my master’s degree in Human Resources, I chose a program that boasted an average starting salary of $70,000 for its alumni.
I knew that half of the graduates were earning less than that, but I didn’t realize exactly how much less they were making. The average beginning salary for entry-level HR professionals is $30,000 annually – which is exactly what my first full-time position as an HR Assistant paid.
3. You’ll be overeducated and under-experienced.
For those who go straight from an undergraduate degree program to graduate school, the “overeducated but under-experienced” problem often rears its ugly head. Employers want to know that you have practical, real-world work experience before they hire you.
They might be willing to hire someone who lacks experience for an entry-level position that doesn’t pay well, but here’s the thing: you’re too expensive.
When they see that impressive master’s degree on your resume, they visualize flashing dollar signs. You might be willing to take the job in order to gain experience, but they know that you’ll leave the second something more enticing comes along.
When I finished graduate school and started job searching, I struggled to find a job. I was flat-out told by several potential employers that I had too much education and too little experience.
4. There is an opportunity cost.
When you decide to go to graduate school, you’re making a choice as to how you’ll spend the next two to five years of your life.
You’ll be attending classes, taking on more debt (assuming that you’re not funding graduate school with cash), and writing countless papers.
Instead of digging yourself further into debt, you could spend those years working full-time, paying off your undergrad loans, investing in a 401(k), gaining a few years of relevant work experience, and increasing your income.
If you’re considering going to graduate school, think about this: what opportunities will you be giving up if you go to graduate school?
One Last Thought
Graduate school often seems like an appealing option, but it can also lead to massive student loan debt. Additionally, an advanced degree doesn’t necessarily make job searching easier – it may actually make it more difficult to find a job because you’ll be overeducated and under-experienced.
If you’re thinking about going to graduate school, make sure to choose a degree program that will be worth both the financial cost and the opportunity cost.
About Millennial Money Man
Bobby Hoyt is a former band director who paid off $40,000 of student loan debt in 18 months on his teaching salary and then left his job to run Millennial Money Man full-time. He helps other Millennials earn more through side hustles, save more through budgeting tools and apps, and pay off debt. He is a personal finance expert who has been seen on Forbes, Reuters, MarketWatch, CNBC, International Business Times, Business Insider, US News, Yahoo Finance, and many other personal finance and entrepreneurship media outlets.
Comments
Lance @ My Strategic Dollar
Thanks for sharing Jen. I’ve never seen the allure of grad school. Sure you can learn more and it’s fun to be in an academic environment, but you can learn pretty anything you need to know through research, reading books and experience. I’d rather learn that way anyways. Not to mention that you won’t go into debt. WINNING.
Millennial Money Man
Man the added debt part is the kicker for me. I’ve talked to so many readers with $100k or more in debt from school. Just gets to be crushing at some point.
Frugal Millennial
If I could do it all over again, I definitely wouldn’t go to grad school. The extra debt was not worth it.
Mrs. Adventure Rich
Completely agree! Grad school can be a great option, but it is not for everyone. For me, the benefit right now would not outweigh the cost/debt I would go into for a grad degree. Than you for sharing!
Millennial Money Man
Sounds like you’re making a good choice!
Frugal Millennial
It’s a good choice for some people, but it’s definitely not for everyone!
Dave @ Married with Money
#3 for sure I always felt was a problem with some of my friends from high school haha.
Personally I’d only go if an employer needed me to go for some reason and was footing the bill. Otherwise, nah. I’ve got a great career with my Bachelor’s degree, don’t see how I’d benefit very much from Master’s.
That being said I do know two people (former coworkers) who are both getting theirs now, so it’ll be interesting to see how it impacts their careers. Both are highly motivated and very successful already.
Millennial Money Man
I agree – if my employer was willing to help or cover the costs I think it’s a great option!
Frugal Millennial
If I could do it all over again, I’d only go to grad school if my employer were footing the bill. It makes more sense in that situation.
Ms. Montana
All good and valid points! It’s easy to chase the paper, without realizing that all that information is mostly out there. Do students really want the information or just the degree. I think once you are at the point where you REALLY need that information, aka, you would just buy the books and read them because the information is that critical to your professional growth, then it makes more sense.
Frugal Millennial
That is a good point. I think employers need to be less picky (in some scenarios) about requiring certain expensive degrees when people can learn so much on their own.
Mrs. Picky Pincher
YAAAAAAS. So check it: I have a friend who’s a teacher. She absolutely loves what she does but hates the politics, so she figured becoming a librarian would be more up her alley. She finishes her grad school for librarian science in December. But guess what? She hates it! So she’ll be graduating with a degree that she won’t use.
I know grad school always seems like the answer, but it usually isn’t. Unless you’re super on board with a certain career that requires a master’s or unless you’re getting the degree for free, it’s not worth it. I have so many friends from undergrad that are in grad school just to keep pushing off the realities of the working world. They don’t even know what they want to do for a career. And that’s scary.
Frugal Millennial
That’s too bad! Spending all that money on a degree you don’t even want to use would be so disappointing.
Penny @ She Picks Up Pennies
You definitely need to have a purpose behind your plan. In a lot of situations, grad school may not make sense. However, if you are a teacher and you’re secure in your job (read: you’ve been there more than a handful of years), get thee to a grad program and get that raise!
Frugal Millennial
I agree that it does make sense in some situations!
Mr. TYMP
Plus one for getting your employer to pay for it. One of my coworkers took his current position knowing that he could get a ‘free’ masters degree. Granted it took him the better part of 4 years doing it part time.
I don’t really see the allure unless you know for sure your income will increase, and your ROI will be solid.
I’m a DevOps sysadmin and like a good chunk of IT, higher ed doesn’t really do anything (unless you wanna take the manager track – not for me technical grunt all the way).
Jen, what about technical training/certifications, have any thoughts there?
Frugal Millennial
I think certifications tend to be more useful than master’s degrees (in my field anyway) because they’re more practical and prepare you for things you’ll actually do on the job. In my master’s program, the classes had too much theory/research and not enough real world applications.
Chonce
These are one of the many reasons I don’t plan on going to grad school (or at least not anytime soon). Don’t get me wrong, it can be beneficial, but I’m still paying off student loans from when I got my first degree! And for me, grad school just doesn’t make a lot of sense. Thanks for sharing!
Frugal Millennial
It’s definitely not worth the added debt for a lot of people!
Linda
Like another reader I waited until my employer would pitch in on the cost. I got my degree loan free and am now qualified for a management position (eventually) in the company. I wouldn’t have made the same choice I’m sure if I would have had to pay for the whole thing myself.
Frugal Millennial
It definitely makes more sense when your employer is footing the bill!
The Savvy Couple
Honestly, if you are planning on going to college, in general, you better have a good understanding of what you want to do with your education.
We were lucky enough to start off at a community college then transfer to a state college. We were able to walk away with our total amount of debt less than most people cumulate within one semester.
Going to grad school is expensive! In NYS having your masters degree is a requirement to become a teacher. It’s a large upfront cost for such little pay in the beginning. The three things that make it worth it is phenomenal health care, pension, and a high end of career pay.
People who go back to grad school for degrees that only pay 30k-40k might not be the smartest choice.
Frugal Millennial
You were smart to start at a community college and take on less debt!
Baylee Miller
I believe the choice of graduate school can heavily depend on the field and what the student does during high school and undergrad. Being involved in science research, some sort of graduate degree is expected in order to get a position in research, while this may not be the case for other fields. Also being involved (whether volunteer or paid) in the field for at least a year before graduation can help eliminate that “lack of experience” when applying for jobs. Like a previous comment mentioned, knowing what you want to do going into college makes a large difference.
Frugal Millennial
I agree that it makes sense for certain degree programs. If grad school is required for the career path you’re interested in, then it would be beneficial.
Peter
After finishing my undergraduate degree in accounting, my first employer paid for my CPA exam fees and prep course (~$5,000). After getting my CPA license I moved to another firm which paid for another two professional certifications. My third employer also paid for another two certifications. Now with six years of professional work experience, my fourth employer will pay $10,000 per year towards grad school. Each job change has come with a 12 – 33% raise. If you have no children, are willing to stay late in the office studying and your employer is paying for it, there’s no reason not to obtain more relevant education.
Frugal Millennial
I agree that it’s definitely worth it if you’re employer is paying for it.
Cory Swain
In my experience it will not pay off unless you have good career experience during your time in school
I have interviewed hundreds of people while I was at a employment placement firm and if they had lots of schooling and not a lot of experience, it actually is looked down on by employers. They are grouped into the “professional student” stereo type and considered lazy.
I have worked in the financial field now for 5 years consulting independent financial advisors and there is no correlation to increasing income with the higher education above a bachelors.
Frugal Millennial
That’s too bad! I’m surprised to hear that since grad school is challenging and requires hard work.
Derek
A post after my own heart. I was within a week of starting law school and decided the debt load would ultimately be too much of a burden. 7 years later and I don’t think I have experienced a single moment of regret. Granted my wife was pursing her doctorate at the time as well so at least we still have one highly educated person in the house 🙂
Nate
Great article…both my wife and I have “wanted” to pursue our grad degrees…for me, the ROI isn’t great enough…for her, more work experience is needed….this article provides additional good insight… Thank you M$M.
Dinero Pro (Javi)
Loved this post. I see this a lot with other fellow teachers. At some point I even thought about going to grad school myself. But once the math is done, it’s actually rarely worth it (for teaching at least). The closest thing might be becoming a principal.
I think it’s only worth it if your employer pays for it. Which is what my wife’s employer does. So we don’t pay a single penny and she’s getting her masters! it’s a win-win. Thanks for sharing.
Stone Squarer 357
All are good points but at the end of the day entering a graduate program should never be about the money. Should be about the knowledge. I’m in grad school now. It’s already paid dividends in my career and I’m not finished. If you choose a program right for you and your interests the money and increase in salary will come. The true value I see in a graduate degree is the knowledge you gain. Combined with your work experience fuels your passions in work and in life….my thoughts
Laura
I think for STEM positions, grad school can definitely be beneficial and if you shop around grad schools, you can get them to pay you to attend (which is what we did…they paid tuition and gave us a stipend to TA as well). Some companies such as Intel, you pretty much need a MS to get in the door and a PhD to advance very far. Others, a high school diploma is fine. Know your career field and what is wanted/required by employers to not only get started, but to advance.
Paije
I think it defiantly depends on each person and their situation. I am currently in graduate school for speech-language pathology and you have to go to graduate school in order to get certified and become a speech-language pathologist because you work in very diverse settings, including those with life or death situations in the medical field. If I hadn’t had to, I defiantly would not have gone to graduate school, but you better believe I was paying down my undergraduate loans with my jobs in between undergrad and graduate school! I have one more year to go in school and currently have a full time, 40+ hours a week, job. But I love this career and I know it will be so worth it in the end with the opportunities I will have. But graduate school is defiantly not for everyone and for every job!!