It’s been a while since you crammed for finals or stayed up all night finishing your thesis. Once you had that diploma in hand, you breathed a huge sigh of relief over never having to do that again. Right?
And yet, the thought of going back to school for a graduate degree has been weighing on your mind, perhaps as a way to advance in your career or to pursue a new passion.
The decision is as much a financial as an educational one. Matt Shapiro, CFP®, member of the Advice Practice team at Northwestern Mutual, has the questions you should ask yourself when you’re considering going back to school.
1. DO I NEED A GRADUATE DEGREE TO GET AHEAD?
What do you actually need to learn the skills that will advance you to the next level of your career?
If you’re an engineer, for example, you may just as easily be able to learn new skills or get new certifications by attending cheaper community college classes or bootcamps. Or if you majored in accounting as an undergrad and now want a master’s in the same field, ask yourself whether you’ll really benefit from that extra degree, or whether getting extra years of job experience will net you the same results, Shapiro says. But if you’re changing fields altogether, you may need to go back to school after all.
Do some research on job sites for positions you’re interested in, and see whether they list a graduate degree as a requirement. Or check out the resumes of people whose careers you admire; do they all have advanced degrees?
And finally, “don’t use grad school as a crutch to delay reality,” Shapiro adds. That could end up being an expensive way to avoid adulting.
2. HOW MUCH DEBT WILL I HAVE TO TAKE ON?
Unless you’ve already been saving for years or have a rich relative as a benefactor, expect to take on student loans to cover the hefty price tag: According to the National Center for Education Statistics, the average graduate school grad owes more than $84,000 in student loans.
Compare that potential debt load with what you think your future salary growth will be. Shapiro likens it to any other type of major purchase you make. For instance, when you apply for a mortgage, you have to know what your debt-to-income ratio will be to determine whether you’re buying more home than you can afford. Same goes with grad school. “If you’re going to spend $50,000 a year to become a creative writer who only makes $28,000 a year, you may find you have a hard time paying those loans off,” Shapiro says. Plus, student loan debt may prevent you from accomplishing other money goals, like saving for your first home, a new car or a dream vacation.
3. WHAT OTHER OPPORTUNITY COSTS SHOULD I ACCOUNT FOR?
There are things you’ll be giving up as a result of pressing pause on your professional life.
“Years of not working also translates to years of not saving for retirement,” Shapiro says, as well as time that you aren’t growing your salary through raises or promotions. Also, if the degree you want relates to your current career, there’s always a chance your company can help foot the tuition bill if you stay employed — money you wouldn’t then have to borrow, he adds. “If you can get your employer to cover the cost, that can help improve the return you get on that degree.”
This article was updated in July 2019.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.