Is grad school worth it?

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Q. I'm thinking of going back to school for my Master's, but I'm not sure my eventual higher salary will be high enough to make it worth it. How can I decide? — Potential student

A. Going beyond four years of college can be a costly endeavor, and you're correct to view it as an investment.

Like any investment, there are risks, and you need to determine if this one is worth it.

"We find ourselves in a time when undergraduate degrees have become the equivalent of the high school diploma of the past," said Steven Gallo, a certified public accountant with U.S. Financial Services in Fairfield, New Jersey. "It seems that graduate school has become a necessity for anyone trying to get ahead in the workplace, the problem being the cost and ultimately the return on your investment."

In an effort to make the calculation, Gallo said you need to do some research.

Start by looking at your field of study. Compare the average salary difference between candidates with undergraduate degrees and those with a Master's degree.

Braden Schipke, a certified financial planner with The GenWealth Group in Maplewood, New Jersey, said you should determine a reasonable salary increase after completing your degree. Then, use the salary level, along with a yearly percentage increase for annual raises, to project how much you would make each year until you retire.

"Adding all of the salary figures up will give you an idea of your future lifetime earnings potential," Schipke said. "Now perform the same exercise using your current salary to project your future lifetime earnings without the degree. Does the difference between the two figures justify the additional cost for your added education?"

You also need to take a look at the actual tuition and associated expenses, like off-campus housing, required to obtain your Master's degree, Gallo said.

Don't only look at the tuition costs, but examine the cost to borrow the funds, including the interest rate. If you have the funds saved, Gallo said, you need to examine the opportunity cost of using those savings to pay for your degree rather than having the funds invested.

Gallo said you should be sure to consider the related costs such as time commitment and earnings lost due to time spent on studies and class time. This obviously would vary depending on whether you are planning on attending school on a full- or part-time basis, he said.

Once you have all this information, Gallo said, it becomes a mathematical calculation to come up with the potential return on investment (ROI).

Don't forget to include the intangible costs involved as well, such as time away from family or friends and the ever-changing job market, Gallo said.

Finally, consider your age and how long you plan to work, Schipke said.

"Generally speaking, it pays to have more working years until retirement so you can realize a greater benefit from a salary increase," he said.

[Editor's Note: Remember, your credit score should be be in tip-top shape before you apply for a loan, including any private student loans you may be considering. You can see where you stand by checking your two free credit scores, updated monthly, on Credit.com.]

Related: The best public colleges in America
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Is grad school worth it?

10. University of North Carolina at Chapel Hill

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9. University of Illinois at Urbana–Champaign

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8. University of Washington at Seattle

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7. University of Texas at Austin

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6. University of California at San Francisco

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5. University of Wisconsin at Madison

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4. University of California at San Diego

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3. University of Michigan at Ann Arbor

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2. University of California at Los Angeles

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1. University of California at Berkeley

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