Graduate School: Should You Get Another Degree?

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Last Updated Jan 11, 2010 11:11 AM EST

With the economy still suffering and jobs about as easy to come by as a winning lottery ticket, you might think now would be a great time to duck out of the grim job market — if you haven't already been kicked out — and go back to school. By getting an advanced degree, you can better your chances of landing a higher-paying job when you graduate, not to mention save yourself from having to look for a job in what is probably the worst market in your professional life.

But higher education offers no guarantees. Going back to school is a significant investment of time and money, and can leave you with a pile of debt. Annual tuition for master’s degree programs in the U.S. can run anywhere from $5,000 to more than $38,000.

That hefty price tag may be one reason the Graduate Management Admission Council, which oversees business school admissions, says it’s starting to see the number of applications for B-school leveling off after three years of robust growth through 2008. But applications to law school actually went up significantly in 2009 following a dip in 2008. And while you many have an easier time gaining admission at less selective schools that are more dependent on tuition revenue, don’t expect to waltz into Harvard: According to Barmak Nassirian of the American Association of Collegiate Registrars and Admission Officers, the top grad schools are still as selective as they were in the past.

Applicants to less selective schools that are more dependent on tuition revenue may find it easier to gain admission. But beware: In the current market, even an extra degree won’t guarantee you a bump in salary. So how do you figure out if school is right for you? We’ll walk you through the things you need to consider before you make that decision.

Is an Additional Degree Absolutely Necessary?

Karen Battoe, a career coach for Allen and Associates in Maitland, Fla., says she noticed a sharp rise in the number of clients last year who considered quitting their jobs to go back to school, and she always asked them the same question: Is this a flight to something or a flight from something? Some of them see school as an escape hatch from a dead-end job, but Battoe says, “You have to ask yourself: Is this a rational move or an impulsive move because of the economy?”

Battoe tells clients to closely examine the reasons why they are unhappy in their current jobs, and assess whether they can do anything to improve their situations if they stay put. For example, they could try to switch groups or functions within their company, or sign up for additional training, either in-house or through outside professional development programs. For general managers and those in business and finance, many top business schools like Kellogg and Harvard offer special seminars and programs that last just a few weeks or even a few days.

If a full-time degree program remains an appealing option, you need to be very clear on what you plan to get out of it — whether it’s a degree that qualifies you for better opportunities in your current field or a way to switch to a more promising field altogether. Battoe suggests doing informational interviews with people in your industry or the industry you aspire to be in to find out whether an advanced degree is really necessary, and if so, how exactly it has helped, both in terms of compensation and job satisfaction.

The Difference a Degree Makes

According to a 2008 U.S. Census Bureau survey of people 25 years old and over, the median income for a bachelor’s degree holder was $55,656. For someone with a master’s degree, however, median income jumped 21 percent to $67,337, and income rises to $100,000 for people with a professional degree in fields such as law or medicine. Doctoral degree holders, meanwhile, commanded a median income of $91,920. (Of course, getting a Ph.D in mathematics and going to work on Wall Street is going to be much more lucrative than getting a doctorate in Renaissance literature and going into academia).

Over the course of a lifetime, a person with a master’s degree stands to earn $400,000 more than someone with only a bachelor’s, according to Priya Dasgupta, director of the graduate program at Kaplan Test Prep and Admissions. Those with graduate degrees are also significantly more marketable than those with just bachelor degrees.

In 2008, for example, the national unemployment rate for those 25 and older was 4.6 percent, without seasonal adjustments. For those with a bachelor’s degree, the rate was 2.8 percent. And the numbers were even lower for people who had earned their master’s degree (2.4 percent) and lower still for those with professional degrees (1.7 percent).

Don’t Ignore the Opportunity Cost

As impressive as those numbers may seem, however, you still have to weigh them against the money you are losing in the short term when you take yourself out of the workforce. Add to that the cost of tuition, as well as health care and living expenses, and the cost of a higher education could stretch into the hundreds of thousands of dollars. Kiplinger.com has a good calculator for estimating the potential costs and benefits of going back to school.

Given the uncertain job market, Cheri Butler, associate director of Career Services at the University of Texas at Arlington, suggests that prospective students instead hang on to the jobs they’ve got and try to go back to school part-time. Of course, if you’ve been laid off, the short-term opportunity cost is a bit lower, but you’re likely to rack up a significant amount of debt.

Have Realistic Goals

With the state of the economy the way it is, if you decide to go back to school, you should have a realistic idea of what to expect when you graduate. Tom Kozicki, executive director of the MBA Career Center at the University of California-Irvine Merage School of Business, says salaries are likely to stay flat for MBA graduates at least in the short term. And the MBA Career Services Council recently noted that there’s been a significant drop in the number of full-time jobs offered to graduates of the 2009-10 class.

Kozicki also points out that salaries typically accelerate after your second or third job out of school, so you have to be patient. “A person determining whether or not to go to business school should be looking at a longer investment,” he says. “It’s not the salary you get right out of school.” And the same idea often holds true for other types of graduate programs.

Peter Varnau, 48, a counselor at the University of Texas at Arlington, knows from experience the importance of having the right expectations, having twice quit his job for additional schooling. The first time, in 1989, he got an MBA from the University of Notre Dame, in hopes of making big money working as a consultant. “I was in my 20s and I wanted to be really successful with the money and the cars,” Varnau says.

It worked — but then in 2003, Varnau got laid off from Price Waterhouse after it merged with Coopers & Lybrand. He went back to school a second time, this time looking for more job stability and satisfaction. He got that after earning a master’s degree in counseling at the University of North Texas.

Varnau says making the same grad-school decisions would be much tougher today. “In my case, it worked out great,” Varnau says. “But if I was looking at that prospect right now, I would be very cautious to leave a full-time job.”

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