The decision to go to graduate school isn't one to take lightly. Attending graduate school means taking on added tuition. And if you haven't even finished paying off your student loans from your undergraduate studies, you may be hesitant to take on even more debt.
Still, for many people, a graduate degree opens the door to more career opportunities. And you may find that having that degree allows you to boost your earnings substantially. That could be enough to justify the cost -- and the burden -- of added student loans.
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But a new report from the U.S. Department of Education uncovers some unsettling trends in the context of federal student loans and graduate school. And you may want to give it a read before signing up for extra loans on top of the ones you might already have.
Is all of that added debt really worth it?
In some cases, the debt associated with a graduate degree might pale in comparison to the earnings potential it leads to. Borrowing $60,000 for an MBA that results in an annual salary of $200,000 or more for decades could easily read like a no-brainer.
But the aforementioned report is quick to highlight that the student debt accrued in the course of a graduate degree doesn't always pay off. Specifically, the report said, "The amount students pay for post-secondary credentials is often only weakly connected to the labor market payoff for the credentials they earn. A particular worry is that too many students take outsized loans relative to what they will likely be able to repay based on the typical earnings of graduates in a program."
The report then goes on to say that 12% of master's degree programs offered by private non-profit institutions and about 25% of programs at for-profit institutions have high debt burdens relative to resulting salaries. That's clearly unsettling.
Do your research before taking on more debt
Whether the cost of a graduate degree will ultimately pay off depends on the individual and their long-term career path. But it's important to take a look at the cost of a graduate degree and compare that to typical earnings in your field.
Spending $80,000 on a master's that allows you to become a social worker may not make sense financially if, based on the specific line of work you want to go into, you're looking at an annual salary of $45,000 for your first decade or more on the job.
Of course, this begs the question: How do personal and career-related satisfaction factor into the equation? To what extent is it worth taking on student debt to land a fulfilling and meaningful job?
That's a hard one to answer.
Working in your desired field is apt to enhance your quality of life. Being overly burdened by student loan payments is apt to have the opposite effect.
Ultimately, you'll need to strike your own balance. But the key is to be realistic about your costs and earnings potential before making the decision to go to graduate school. And depending on your circumstances, it could make sense to get some lower-level experience in your field before committing to a graduate program and the potentially high costs involved.
