Degree1While the cost of an undergraduate degree has risen by nearly five times the inflation rate since 1983, it’s still pretty easy to get financial aid to go to undergraduate school. Almost no one pays full sticker price for an undergraduate education. But graduate school is a different story.

A graduate degree can cost hundreds of thousands of dollars — especially if you enroll in an elite program at a prestigious school. You may be in a field, such as medicine or law, where you need the advanced degree, but you may have heard horror stories about people who leave grad school with massive debts that they can’t pay off, because they can’t get a job.

It’s important to make sure that there are plenty of jobs available to advanced degree holders in your field, and that you’ll make enough to both pay off your loans and offset the extra couple of years out of the work force.


Look at the Job Market in Your Field

The best way to end up saddled with six figures of debt that you can’t pay off is to take an advanced degree in a field that’s already glutted with qualified applicants. If you’re thinking of going to law school, for example, you might want to think twice — law graduates are having a hard time right now finding jobs, and many new law graduates find themselves living in near poverty as they struggle to put their degrees to good use. The same can be said for Ph.D. holders who hoped to get jobs as tenured college professors.

That doesn’t mean you’re out of luck if you want to further your career through more education. There are plenty of fields that need educated workers. Take health care, for example. Reform has made it possible for millions of new customers to enter the system, and at the same time, aging Baby Boomers are requiring more and more care. The health care system is struggling with a shortage of primary care providers, and not just doctors — there’s also a huge demand for nurses, especially nurses with doctorates who are qualified to educate nursing students. If you want an advanced degree that will pay off, you might want to go to school for a Doctor of Nursing Practice degree.


Calculate Your Future Earnings

CongratulationsOf course, there’s no way to know for sure how much you’ll earn after you get an advanced degree. There are a lot of variables in play — you might get a job as soon as you graduate, or it might take a while before you find a position. You might have enough money to continue contributing to your IRA while you’re in school, or you might have to put it on hold for a few years, either way, that’s going to have an impact on your overall financial picture when it comes to retirement.

Forbes contributor Laura Shin recommends using a website like to calculate how much you’ll earn in your first year out of grad school. Use a conservative estimate, that way you’ll be prepared if things don’t go as well as you’d hoped. Don’t borrow more than you’ll earn in your first year out of school, and don’t borrow more than you can pay off in 10 years or before retirement, whichever comes first. If you have to borrow that much, the degree isn’t worth it.

If your loans will be appropriately small, make some rough calculations of how much you’ll earn over the course of your lifetime with and without the degree. When you calculate how much you’ll earn with the degree, make sure you subtract lost salary for years out of the work force as well as lost retirement savings, unless you’re planning to continue saving for retirement throughout grad school. Also factor in repaying your student loan — with interest and inflation; it might be a good idea to subtract double the amount you borrowed from your lifetime earnings potential.

If you find that you’ll earn significantly more over the course of your lifetime with the degree than without it, then it’s worth it. Be wary if your lifetime earnings with the degree are within about $100,000 of your earnings without the degree; it would be too easy to end up losing money if you faced a year or two of unemployment or some other catastrophe. Of course, if the degree is going to give you great skills, great experiences, and great connections, it might be worth it even if you don’t see yourself earning heaps more. You never know what might happen down the road, and as long as you’re reasonably confident that you’ll be able to get a job and repay your student loans, more education is never a bad thing.

Grad school is expensive and the future is uncertain — will earning that advanced degree be worth it? It might be. As long as you’re going into a field with lots of jobs and high earning potential, you’re unlikely to be saddled with an expensive degree you can’t afford to pay off.