Is a Graduate Degree Worth It?

Do you need or have a graduate degree? Are you concerned about how to pay it off your student loans even without a graduate degree? Here’s the information you need.

The Financial Hardship of a Graduate Degree

If you’re debating on the need for a graduate degree, it’s important to consider your current situation and all your options. College and graduate school have never been more expensive. It’s almost impossible for a student to work their way through college or graduate school and graduate debt free. It’s not impossible, just almost impossible and this is how you can achieve it.

Most undergraduate students can guarantee they’ll graduate with some amount, if not a considerable amount, of debt. It’s not unheard of for graduate students to have $100,000 or more in student loans upon graduation.

Determining if a Graduate Degree is Right for You

The first question a college graduate must ask is whether a graduate degree is worth it. Any business major understands the definition of “return on investment” or ROI. ROI measures the benefit of your time or money in something, such as the benefit of spending two additional years in school at the cost of $30,000 to $120,000.

As Odysseas Papadimitriou shared, sometimes a graduate degree isn’t necessarily worth it. Papadimitriou found his MBA to be “redundant to his dual undergraduate majors”. He hypothesizes that it may have served him better to choose a more diversified career path. In the end, it worked out for him, but his analysis poses an interesting question in the value of higher education.

Before taking on more student loans, college graduates should be very clear with how they’ll pay for additional schooling and of their career plan.

  • What do they really want to do?
  • Is additional school their only option?
  • What investments will they have to make after graduation?

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Practical finance questions are important to ask, too, such as:

  • What will the net total of all their student loans be after graduate school?
  • What interest rate will they pay?
  • What will their expected salary be upon graduation?
  • What is their expected rate of salary growth?
  • How long will it take to pay off all their student loans based on their salary estimate?
  • What other life goals or dreams will they have to give up or defer for a graduate degree?

Depending on the undergraduate’s answers, graduate school may be right for them. It, also, may not be. Alternatives, such as paid internships, strategic career management, career diversification, among others, may make more financial sense.

The Fastest Way to Pay Off Student Loans Today

This leads us to our second point. If the college graduate determines that a graduate degree is necessary for their situation, how will they pay off all of their student loans?

Student loan rates are high and it’s not a guarantee that a graduate will be able to refinance their student loans to a lower rate. A lot of what it takes to refinance requires variables outside of the graduate student’s control.

Graduate students do have some control over their salaries. A number of factors, such as acquiring critical skills and experience, building a solid resume, being flexible on location and networking can help a graduate acquire a good income.

Meet SoFi

The most critical factor in acquiring a good income is knowledge of incomes based on the student’s graduate degree. This is where our friends at SoFi can help. SoFi analyzed over 300,000 borrower application incomes by degree types over the first ten years after graduate school.

With this information, a graduate knows the average incomes of their peers since graduation. This helps the graduate to know when they’ve received a fair offer and what income they should reasonably request.

SoFi also provides six essential tips for better salary negotiations. Salary negotiation is a skill, but a critical one for graduate students to master so as to not short-change their long-term income.

The more a graduate earns and the lower they can keep their standard of living, the faster they can pay off their student loans. With the high rate of most student loans today, it’s important for graduates to pay their student loans off as fast as possible so they can stop paying for their past and start saving and investing for their future.

Review the infographic to help negotiate a higher income to pay off your student loans as fast as possible. If you have questions, you can reach our friends as SoFi by clicking here.

Finally, heed Papadimitriou’s sage advice and “don’t let parental or societal expectations divert you from your pursuit of personal and professional happiness”.

Return on Education - Debt Free Guys

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Comment List

  • Clarrise @ Savvy Scot 04 / 05 / 2016 Reply

    For me, it depends on the student if he will work hard and choose the right career for him/her. I agree that SoFi would be a great help.

  • FiFever 04 / 05 / 2016 Reply

    I just recently decided against getting my MBA. All of the studying I had done for the GMAT and I had never really taken the time to evaluate if the extra degree was really worth it.

    The debt really wasn’t even going to be the biggest cost for me. I would have given up 2 full years of income.

    This means that if tuition was $120k, I’d also need to add in two years of income making the full opportunity cost come out to about $330k. I might be retired by the time it would take me to make that money back!

    Keep in mind in those two years you might get promotions, lost out on retirement account contributions, or maybe even find you have the experience to trade up to a better job.

    • David Auten 04 / 05 / 2016 Reply

      Thanks for the great comment. We didn’t even consider that as part of the cost, but you are absolutely right. Many keep working while getting their MBA, but there are quite a few who do not. So there is the missed opportunity of income that should be added into the overall costs. Smart thinking! 😉

  • CentSai 24 / 05 / 2016 Reply

    Wow, really interesting post! We think a grad degree depends on the student and his or her situation financially, academically, and professionally. If you don’t mind me sharing, these are two contrasting stories about getting a grad degree that shows both sides of the coin. Here are the links:

    • David Auten 24 / 05 / 2016 Reply

      Not at all. We can’t possibly be the only opinion out there. A good dialogue is good to have.

  • ZJ Thorne 26 / 05 / 2016 Reply

    Without my graduate degree I would not have the income and potential that I do. Worth it for me.

  • BrokeAsB 12 / 04 / 2017 Reply

    I worked while getting my MBA but still came out with a beastly load of debt. In my industry it’s definitely easier to break in and make a high salary with an MBA but I often wonder how I would have fared without one and without the debt. Guess I’ll never know! To me even though I have a ton of debt it was worth it in the end to create the network I now have and finding the field I work in now which I love and honestly didn’t even know existed before school. Great post to give some perspective!

    • John Schneider 30 / 04 / 2017 Reply

      Sorry for the delay in getting back. Thanks for the comment. There are quite a few industries that seem to almost require an MBA these days. Sadly, not all of them pay well, such as social work.

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