2. Estimate your increase in lifetime earnings
Research potential future employers and figure out what people are earning in roles related to your degree. Conservatively estimate your future annual salary after graduation based on your experience and education, and take note of raises and promotions. You can use sites like PayScale and Glassdoor to find realistic matchespare this with your current salary, or the salary of the job you hope to get without going to graduate school.
Eventually you want to arrive at a figure that roughly estimates how much additional money you’ll make over the course of your lifetime with the degree you’re pursuing. For example, maybe entry-level salaries for your expected career pay $5,000 more per year than what you’re making now. When you look into mid-career salaries, they pay $10,000 more, and late-career salaries are about $15,000 more. It’s safe to estimate an average salary increase of $10,000 per year. If you plan to work another 30 years, that’s a $300,000 increase in overall lifetime earnings.
3. Use simple math: Increase in lifetime earnings divided by overall loan cost
Finally, divide the increase in lifetime earnings by the overall cost of your loans, interest included, to arrive at a rough ROI on the investment of graduate school. This number should be greater than 1.0, otherwise you’ll experience negative returns.
Other common guidelines for figuring out if student loans are worth it include being able to repay your student loan debt at least 10 years or before you retire, depending on where you are at in your career.
If the numbers don’t add up, it might be time to consider a different degree or career path. Or, if you are set on pursuing a career, but it won’t pay off in a monetary sense, look for alternative ways to pay for your graduate degree — ones that don’t involve such a high debt burden.
What are the graduate degrees with the highest and lowest ROI?
A graduate degree can open the door to new career opportunities and higher pay, but it isn’t guaranteed. Here are some general examples of graduate degrees with the highest and lowest ROI.
Degrees with the highest ROI
Both MBA and Master of Science degrees present some of the lowest student loan burdens of any graduate degree and open the door to careers with annual salaries exceeding $100,000. Degrees in finance and economics have a median pay of $134,000, and mathematics and statistics pay out at $129,000 per year. Many CEOs use their general MBA degrees to achieve salaries upwards of $180,000. A number of engineering careers, including telecommunications, electrical, biomedical, and computer engineering, top the list of best-paying masters degrees as well.
Dental and medical professionals incur more debt than master’s graduates but stand to easily recoup that cost with median salaries in the $150,000$200,000 range or even higher. Nurse anesthetists can expect a median annual salary of $165,000 and will likely graduate with less debt as they’re only required to complete a master’s degree.
Degrees with the lowest ROI
While the jobs associated with certain graduate degrees are meaningful and certainly needed, they tend to limit earning potential. A human services degree that is used in the nonprofit realm brings in an average $46,600, while a degree in childhood education has a median pay of $49,200. Degrees focused on fields like library science and museum studies hover around $50,000 per year.
Many of these degrees end up being the most costly, as well — while Master of Education graduates take on less debt, on average, than others, Master of Arts graduates leave school with more student loan debt than any other master’s degree.