The ROI of a Graduate Degree

It's More than a Number

Is grad school really worth it? It’s a question almost anyone considering graduate school has asked themselves.

The answer is not as simple as the question. Sure, “worth” can mean monetary value, but it’s also linked to more abstract concepts like usefulness, self-esteem, and personal value.

According to psychologists, the latter kind of worth—emotional worth—is just as important as the former when it comes to decision-making.

“Emotions indicate the relative importance of things like relationships and achievement in contrast to just plain money,” Paul Thagard, professor of philosophy and advisor for the Cognitive Science Program at the University of Waterloo, says.

To determine true “return on investment” for complex decisions like graduate school, an understanding of both financial worth and emotional worth is critical.

Austin Fadely

MBA, Wake Forest University ’14

"I think graduate school is a great option for people that are willing to go out and 'sell' their degrees. In many fields, simply having a master's won't do anything. For my own part, I didn't receive a raise at my old job when I went back. Within three months, I found a new job that offered $10,000 more than what I was making and negotiated an even higher salary to earn $20,000 more.

I didn’t assume I would get more money for having a degree; I had to search around to find a company that valued what I brought to the table. I fully believe I wouldn't have been able to get nearly as much had I not had my degree, not just for the degree itself but for the negotiation skills I learned as part of it."

Look at the Numbers...Closely

A quick glance at the numbers (cost of grad school versus projected pay post-grad school) makes an advanced degree seem immediately worth the investment.

Income Tend to Rise With More Education

Dive deeper into these hard numbers, though, and there’s more to consider: ROI calculators and projected income graphs typically rely on the median data, which doesn’t accurately represent every grad student’s experience. For example, the median income for medical school graduates a few years after graduation is $75,000—but that means that half of M.D. degree holders in this timeframe earn more than $75,000, and the other half earn less.

Every Degree Has a Wide Range of Incomes

Our individual lives rarely mirror a median—which is why emotions must be part of any rational decision.

Expand Your Idea of Rationality

The idea that our most rational decisions are bred from emotion seems counterintuitive. In some ways, it is: impulsive decisions ruled by emotion aren’t rational. But decisions based only on numbers aren’t rational either.

“Rationality means accomplishing, as best as you can, all of your goals,” Thagard says. “There is empirical evidence now that, beyond a certain amount, money really doesn’t increase happiness—whereas good relationships are a crucial part of living, having a sense of accomplishment and achievement are a crucial part of living. People making a decision to go to graduate school should be balancing all of these things.”

Economists Angus Deaton and Daniel Kahneman found that money does buy day-to-day emotional well-being, but only up to $75,000.

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Jeremy Shinewald, founder of MBA admissions consulting firm mbaMission, has seen Thagard’s balancing act play out firsthand.

“A lot of graduate students think about goals they can write about in their application, but not necessarily goals that are meaningful to them,” Shinewald says. “And then they don’t explore: they arrive on campus, recruiting starts two weeks after they get there, and they’re sucked into a vortex.”

According to Shinewald, when applicants consider an MBA only to pad their wallet or boost their résumé, they tend to regret their decision and take a job they don’t really want. Conversely, those who pursue an interest or passion tend to flourish once they achieve their degree.

Strike a Balance

Thagard uses a strategy called “cognitive-affective mapping” to help people come to a decision that fully considers both the economical and emotional. The map applies different colors, shapes, and lines to elements of a decision to help you identify what you actually value, what you want to avoid, and where these elements conflict or align.

It may very well be that a high-paying job is your No. 1 goal, or that continuing to learn in an academic setting is your calling—either way, the key to good decision-making is to weigh all of the investments together: the numbers, the emotions, and everything in between.

Should You Go to Graduate School or Stay on Your Current Career Path?

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