Keep Working or Go to Grad School: Which Is the Better Financial Move?

We’re living in economically uncertain times. A recession is looming and thousands of jobs are being shed amid mass layoffs. Some employees may be asking themselves, “Should I keep working or go to grad school?” Which is the better financial move? 

There’s no one-size-fits-all answer and, ultimately, everyone’s situation differs. But there are several factors everyone should consider when weighing this decision. 

Consider the ROI

“Before making the decision to go to grad school, it is important to consider the potential return on investment (ROI),” said Cordearo Dadson, founder of Pocketcows and co-president of the Private Directors Association of the South Florida Chapter. “This will help you determine if the investment of time and money in grad school will actually result in a financial gain in the long run.” 

Measuring the ROI of work should be relatively easy. You know how much you make and roughly how much you stand to earn in your career. But how do you calculate the ROI of grad school? You need to factor in a few different things. 

Consider Long-Term Earning Potential Minus Education Costs

Your ROI calculation should take into account the long-term earnings you can make from your degree minus the costs of grad school and student loans (if applicable). 

“While a graduate degree may result in higher earnings over the course of a lifetime, it is important to consider the financial implications of going to grad school, such as tuition costs, opportunity costs (e.g., lost wages while attending school), debt and the potential for unemployment after graduation,” Dadson said. “Additionally, if you are taking out student loans for a graduate degree, keep in mind that payments begin approximately six months after graduation, so it’s essential to have a job lined up before or shortly after graduating or else you risk defaulting on your loans.”

Make Your Money Work Better for You

To an Extent, Age Matters 

It’s a brutal truth, but age matters. A Gen Zer simply has more time to recoup earning losses from going back to school than a Gen Xer does. 

“Someone in their 20s may have more time to make up for lost earnings, while someone in their 40s may be more concerned about maximizing their earning potential in the short term,” Dadson said. “You may opt instead to use your experience and skill set to negotiate promotions and raise requests from within your current careers.” 

Professional Experience Should Play a Role 

Where you are in your career also should help determine whether you decide to take a break from the workforce to go back to school. This sort of contradicts the point about being young. 

“If you are in your 20s, you may need more professional experience to help you choose to quit working,” said Annette Harris, SPHR, FFC, owner at Harris Financial Coaching. “You should ask yourself if you have found the passion for continuing in your current career field. If you haven’t, you should continue working until you can determine what graduate school program will help determine your future career goals.

“If you’re in your 30s, you may have the experience required to decide which path degree program you want to enroll in. If you work in finance, are you interested in quantitative finance, financial economics or compliance management? At this time in your life, you may have found your passion and can make a more informed decision.”

Make Your Money Work Better for You

Know the Answers to These Questions  

If you’re on the fence about whether to quit working and go to grad school, answering these questions provided by Harris may help: 

  • What will be the long-range benefits of reducing your income and putting your career on pause to get an advanced degree?
  • Will the time off help you expand your earning power?
  • Do you currently have job offers that may not require a graduate degree and will result in an increase in income?
  • Can you afford to pay for grad school and reduce your income?
  • Are you willing to come to terms with the fact that it may not result in a higher-paying position after graduation?
  • Does your employer have a tuition program that will allow you to continue working while pursuing your graduate degree?

The Debt May Not Be Worth It 

The decision to leave the workforce and attend grad school can render tremendous returns. That said, you need to have an ironclad plan in place to pay off any debt that is incurred by earning your degree. This is especially important if you are a woman of color. 

“In many of the fields pursued by Black and Latina women, a graduate degree may not significantly increase their earning potential, which is what makes it difficult to repay the debt,” said Alicia Holmes, financial educator and coach at Journey to Wealth. “This issue, along with the compounding interest, puts them in a very challenging financial position. I have found that for many women it is difficult to secure employment with a graduate degree, and/or the investment in time and money has not resulted in significant enough career advancement or higher earnings.”

Make Your Money Work Better for You

If going to grad school is not the right choice for your finances, but you’re not happy with your job, you may want to consider entrepreneurship — though you’ll also need some appetite for risk with this path. 

“Entrepreneurship may offer an alternative to grad school that has the potential for high financial returns,” Dadson said. “However, it also comes with risks and requires a lot of hard work and dedication.

“Before deciding to pursue entrepreneurship, it is important to consider factors such as market demand for your product or service, personal interests and skills, and the potential for failure. Entrepreneurs must understand what it will take to run a business successfully and stay on top of changing technologies and trends. Researching other successful entrepreneurs in your industry, reaching out to potential mentors and utilizing resources such as legal advice and accounting services can prove beneficial for long-term success.”

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