Ask the Readers: Is Education Always a Good Investment?

Lisa is trying to decide what to do with her life. She's in her mid-thirties, has two young children, and for the past few years has spent most of her time parenting. Now that the kids are older, she'd like to go back to school. But she's worried it might not be a smart financial decision:

Common wisdom says that education is always a good investment. Is that always true? If I already have a college degree, is it truly a good idea to invest in another degree, taking into account lost income, the cost of tuition, childcare expenses, and any interest accrued in loans? Is there a base salary that you should expect to earn before additional education is a good investment?

Jethro wrote with a similar dilemma:

I'm a middle school teacher in Utah, and I don't make much: $27,859/year. I am getting my masters in my Educational Administration. If I stay in Utah, the lowest salary I will get if I am an Assistant Principal is about $45,000. If I move to someplace else — I am thinking Spokane, Washington — I could make $70,000, at least. My wife and I have about $34,000 in student loan/car debt between us. Here's the rub: I don't make enough to pay for schooling outright.

My question is: Should I go into more debt to ensure that I can get a better paying job? Or put off schooling to pay off debt by working two or three other jobs? If I put off schooling, my income will rise to about $29,000 from teaching in three years, which is probably how long it would take to pay off all that debt. Then I could start school again.

Lisa and Jethro both face the sort of tough financial decision for which there's no clear answer. I believe that additional education is usually a smart move, but clearly that can't always be the case. At some point, education becomes an expense not worth making. But where is that point?

When is debt acceptable? Should it be avoided at all costs? Or is debt for education worthwhile? How much debt for education is too much? Is there really any way to determine the “financially optimal” path? Are some types of education generally a better investment than others (e.g., trade schools)? More to the point, what are your personal experiences with educational debt? Do you wish you had never taken on the additional burden? Do you wish you'd done so earlier?

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xshanex
xshanex

huge believer in education but not all education is created equal. Some people are more focused on money while others want to do a specific job no matter what the pay is because they enjoy the work…school teachers, social workers, For the mid-30’s lady it depends on her local region’s job market, where she wants to live, and what she wants to do. That will be the biggest factor in earnings potential at any level of education. I would tell her to explore her community and see if there is something that only requires a 2 year degree or certifications… Read more »

The Saving Freak
The Saving Freak

I do not believe teachers should automatically get their masters degree, especially if they are taking on more debt to do so. The best route is to get your national board certification. In my state, SC, a teacher will get an automatic pay raise of $10k with this certification and it lasts for 10 years. This is one year of hard work but by doing so you earn enough extra money to pay for most of your masters work or live comfortably on your new salary. My wife is a teacher and after looking at all the ways they can… Read more »

Laura
Laura

I think that education can be a good opportunity, but the full time student/advanced degree option is not the best fit for all. Attending part-time may take longer, but could be less of a financial burden. Does his school system reimburse him for classes that he takes after the semester?

My mom is working on an advanced degree and is taking 2 classes a semester. In January, they reimburse her for the Fall.

I wish both of them well.

James Tharpe
James Tharpe

I never went to college and I can’t say I ever missed it. There is plenty of free education online and, unless you want to become a rocket scientist or brain surgeon, it’s easy to get jobs that “require” a college education even if you don’t have one. Just get involved in the community (computer science in my case) you want to be a part of and never stop learning about it. Ever.

sandycheeks
sandycheeks

I’m considering going into debt or raiding the EF in order to finish a masters. So in some ways I understand the OP’s position. But I enjoy education and do not see it as just a means to an end.

James
James

Just from the perspective of money (not happiness, etc): It’s quite “easy” to determine the optimal path. What will it cost you to go to school (including time that you’re not working (“opportunity cost”), child care, tuition, extra health insurance, etc)? And how much extra will you earn per year? For how many years? Realize that an extra $1000 in salary in 10 years does NOT cancel out a $1000 expenditure today, keep as many variables equal as possible, and do the math. That’s called the Net Present Value of your decision — the income minus the expenses, all in… Read more »

Leslie
Leslie

There are so very many factors and the answers will not be the same for everyone. I am in the same place as the person in your first example. I am in my late 30s with a 5 year old and a 22 month old. I have been home with them since my oldest was born. I worked in advertising for 12 years before he was born and have determined that for a number of reasons that is not a field I want to go back to. However, now that my daughter is getting a little older I have been… Read more »

Minimum Wage
Minimum Wage

What will it cost you to go to school (including time that you’re not working (”opportunity cost”), child care, tuition, extra health insurance, etc)? And how much extra will you earn per year? For how many years?
——————————————–

Unless you’re training for a specific career (e.g. teaching) you can’t assume extra earnings. Where I work there are three college graduates earning minimum wage.

Minimum Wage
Minimum Wage

Some people say that a college degree is worth more than a million dollars in increased earnings. He says college is a good investment.Where’s FMF when you need him?

DebtyBetty
DebtyBetty

I know there are a lot of scholarship and grant programs out there that are geared to stay-at-home moms who want to get a degree (and presumably advanced degrees too) and get back into the workplace. I definitely think Lisa should look into that. try scholarship search engines like FastWeb and Peterson’s.

escapee
escapee

In my case it was definitely worth it. When I graduated from grad school I had 30k in student debt. My first job was a “dues-paying” one and I only made $24,500 a year (THAT was awful). The next year I got a job with a salary that doubled that. My salary has gone up exponentially since then (10 years ago). I would be absolutely barred from holding the job that I have now if I did not have an MS in my field (it is required).

I paid off my 30k loan about 5 years ago.

Brainy Smurf
Brainy Smurf

I don’t think it’s worth it, and that isn’t really to say a higher education is a waste — it’s more a statement of how overpriced it has become. I dropped out of University and landed a job, which I still have to this day, less than a week later. Had I finished my degree, I can never be certain of where I may have ended up, but I find it really unlikely that I’d have come out ahead of where I am now. Hard work and determination have gotten me farther than a diploma ever could have. And best… Read more »

Tana
Tana

I think it’s not a yes or no question – you have to look at all options. My husband just finished getting his masters, which should boost his income by 25% or more. To us, that was worth it. Getting a second college degree? I think way too much stock is put in getting a college degree. Yes, some jobs require one. But there are a lot of good jobs you can get with just having one. I never used mine specifically, but I think it helped me get better jobs because I had it. You also need to take… Read more »

dora
dora

I think one has to think long and hard about what they want to do before committing to school, or you end up like my fiancee. My fiancee, before I met him, went to graduate school for Government Administration. He went to a private university and it cost him about $50,000, most of which is debt we will pay for for the next 30 years. Now, this is a sound investment if he were interested in becoming a high or mid level government administrator, who would make 80-120k a year. But after working in that industry for a year it… Read more »

Patrick
Patrick

For Jethro another thing he should consider is whether or not he wants to go the administrative route. Many teachers have no desire to be an administrator. My mother is a teacher in TX and although she would like a Masters Degree in teaching, the salary difference is only about $2-3k more per year. That is not enough to pay for the schooling unless she goes into administration, which is not what she wants to do.

The Financial Philosopher
The Financial Philosopher

As Ralph Waldo Emerson said, “Money often costs too much.” In any personal finance decision, people most often go wrong when a decision is primarily based upon “the cost.” For example, here are some of the “wrong” questions to akd regarding the education decision: How much will it cost me? How much will my pay increase after receiving the degree/certification? How long will it take? Here are the “right” questions to ask: Is there potential to learn more about something I am passionate about? Will I actually enjoy the process of learning? Am I doing this for me or someone… Read more »

TosaJen
TosaJen

When I think about this, the major issues are whether the field I want to move into requires a certain amount of education and licensing. Different states require different levels of formal education and certification for the same position to get your foot in the door. Whether it would be a “good investment” for you depends on costs for the school you go to, what field you’re going into, whether you’re going into a field for love or money, and how you’re going to pay for it. Since we’ve married, DH and I have both been back to school —… Read more »

SJean
SJean

Education is usually worth it, but definitely NOT always. I think it gets more dicey once you have a B.S. and are considering going into debt to further it. You really have to run the numbers, as earlier commenter detailed. Also, take into consideration personal gain. If education is a “break-even” effort, or even a slight financial loss, there may be personal fufillment reasons to doing it anyway. The most important thing is to understand what you are doing. I went into debt for my undergrad and it was most certainly a good investment. Now my company pays for me… Read more »

Alya
Alya

This is my story. I started my Masters in Computer Science when I was 34 years old. I studied in a school that offered the lowest tuition possible. After a semester I obtained a grant that covers my tuition and gives me a stipend of 700 a month. During this time I lived very frugally and kept my focus that this is only for 2 years. Today I earn much more due to my educational background and I am much more confident. I think paper qualification helps, whether you like it or not. Another option is the local community colleges… Read more »

Andie
Andie

I’m finishing up my doctorate right now and the advice that I’ve been giving folk about graduate school is this: __Do not go to graduate school until you find that you cannot have the life you want without it.__ People tend to snicker when they hear me say this because they think I’m jaded or cynical, but I happen to love the choice I made for myself. Thoughts: 1) Financial cost/benefit–see comments above 2) Learning can be done far outside of formal educational settings. Loving to learn is not equal to “MUST GET ANOTHER DEGREE” 3) Psychic cost/benefit–there are absolutely… Read more »

Tiruvan
Tiruvan

No. Not always.

Sam
Sam

I think it may make more sense for the mom to go back to school. Being out of the work force for a while can hinder reemployment, grad school would probably help her get back on track. I’ve heard of grad school programs especially designed for moms coming back into the workforce, might be worth a look. I went back to school (full time 3 years) for a professional degree and my first year of post school employment I tripled my salary. My husband went to grad school part time (weekends for 3 years) partially paid by his employer. My… Read more »

Lainie
Lainie

As Dorothy Parker said, if you can’t be a good example, be a horrible warning. Well, I feel like that horrible warning. Go back to school. In my 30s I had two chances to go to excellent masters programs and didn’t because I didn’t want to take on the debt. I ended up with debt anyway as an underearner, and now at 50, having just lost my job this fall, I still feel I have to go back to school — but it’s a lot harder now. When you hit 40, you really begin to see that those with graduate… Read more »

King of Debt
King of Debt

Educational debt is a double edged sword. If it wasn’t for the educations that we have, our income would be much lower than it is. Of course, thankfully our educations allowed for that, or we would never be able to pay back our educational debt.

claymeadow
claymeadow

Is the cost of an education worth it? Well the answer is relative to each one of us. First, I would suggest that the mid-30’s women clearly define their end goal and then work back from there. It may turn out that they do not need school to meet their set goal. If they do go to school, I would recommend nothing less than a degree in business admin unless they have a better option to make money. Let’s face it she has kids and is going to need a solid 20 yrs of earning to keep pace with the… Read more »

anotherKate
anotherKate

@Leslie: not sure what your reasons for considering an ML(I)S, but don’t believe all the hype about the librarian “shortage”. There are many wonderful things about being a librarian but it can be a difficult field to break into without prior library experience and the cost of the degree can be high in the face of a $40K a year (or less)salary. One way some folks make it worth it financially is to find a non-librarian job in a library that will pay for at least part of the cost of your masters program. If you’re not there already, the… Read more »

lisa
lisa

I think that education is worth what your drive/goals are. It really depends on what you see yourself doing in the next 20-30 years. Education never goes away, and every year you get older it gets harder to accomplish. I personally think my educational debt was well worth it. It cost me about $50,000 in loans to complete undergrad and grad school (I really worked it and got 2 Master’s degrees in 2 years full time) and my salary went from $17,000 post BA to close to 6 figures 7 years out of grad school. That being said, I also… Read more »

JenK
JenK

This is a situation where the non-financial questions are very important, if not more important, than the simple financial ones. – Do you like the job you have? – Will the education help you do better in your current job/field, or will it help you move into a different field? – How sure are you that the different field is a good fit for you? – How sure are you that you can manage the changes that come with going to school? In Jethro’s case, yes, he could earn more as an administrator in another city. Is that what he… Read more »

Money Blue Book
Money Blue Book

Expensive education is only worth it if you reasonable can expect comparable payoff upon graduation.

In my field, law school is not as worth as much as it used to. Unless you are at the top of your class at a top tier school, lawyers average around $40,000 upon graduation but average around $75,000 in student loan debt. Clearly not always worth it.

Sarah
Sarah

Jethro, I too am a middle school teacher, as is my husband. We work in Los Angeles, though, where the starting salary is over $45,000. Without even getting a Master’s, you can easily make over $50K after a few years. Sure, the cost fo living is higher, but you’d probably still come out ahead simply by moving to a better-paying area.

Alya
Alya

One more thing to add: It really is not just additional education that gets you a great job, but really the choice of subject being studied, the demand in the job market and your personality in handling the job. I frequenty study people who have high paying jobs and find that they all have strong personalities and special strides that makes them who they are and what they are. You may have great education, but without proper dedication and determination, I don’t think it matters. You need to sit down and chart out your life on a paper and see… Read more »

Heidi
Heidi

I took on $30,000 in student loan debt to get my MBA, which resulted in a new job making $32,000 more than my previous one. I would say that debt was an excellent investment – but I work in an industry known for high-paying jobs.

In the teaching profession, social services, and the non-profit sector, extra education does not necessarily mean tons more money. Depends where you live and what your life goals are.

elisabeth
elisabeth

I went to graduate school a few years out of college–partly because with the TA-ship and other grants I was offered I was making as much (and got better health care benefits) than working at an entry-level job. In fact, one of my undergrad advisors told me not to go to any program that didn’t want to invest in me (this doesn’t work for professional training, but other kinds of MA/PhD programs usually try to offer support to every one they accept). If one is willing to live the graduate student life, the debt load doesn’t have to be so… Read more »

Luis
Luis

This is a personal decision that varies with the individual. If you are set on pursuing a higer education I would explore online programs which are relatively cheaper than any other brick-and-mortar institution. Not only will this save you money but also time. Online classes will allocate time to spend with your family since you don’t even have to leave your home to attend these classes. A lot of people do not even consider this option and belittle it. I would not jump on that bandwagon so quick. One of my professors is currently getting her PhD from an online… Read more »

Penelope
Penelope

Before B.S. $16K

After B.S. $24K

After Masters $42K

Now (7 years later) $70K

Monthly school loan payment was $210 on loan of $26K. It’s now paid off but that’s due to an inheritance; I’d still be paying and happy to be paying the loan off (I had it down to $16K). I found it to be totally worth it.

And I work no where near the field I studied.

escapee
escapee

I will refer you all to a recently published paper (that I just reviewed on my blog the other day) entitled : By a Thread The New Experience of America’s Middle Class(you can read it here: http://www.demos.org/pub1514.cfm)that states: “As the difference in earnings between high school and college graduates hits record levels, a college degree is becoming a minimum requirement for the middle class. Over the course of a lifetime, a graduate of a 2-year college earns about $275,000 more than someone with only a high school diploma. Someone with a degree from a 4-year college earns nearly double. A… Read more »

Laura
Laura

It depends on what you’re studying. I’m still young enough that people are constantly encouraging me to get back in school, and telling me I “need” a college degree. I wanted to be a baker, but rather than getting into a LOT of debt getting a 2 or 4 year degree in baking at a private school (http://www.jwu.edu/sfs/tuition.htm 20,000 a semester, 3 semesters a year) I paid about $1,000 to get my 1 semester baking certificate at the local community college. Flash forward a few years- I’ve got a job I like, I’m above and making more than someone who… Read more »

Camilla
Camilla

I found your blog some months ago and am absolutely loving the content! I may have something to contribute in answer to this post, although only to Lisa – i’m unfamiliar with Jethro’s situation: I would raise two points for Lisa. One is to take the chance to tailor the courses and qualifications she studies towards a specific career choice. My first degree contributed *nothing* towards me getting my current professional position, my boss tells me. Generic qualifications can be helpful, but tailored courses that work towards a specific job are sometimes essential, and could make Lisa’s chance of paying… Read more »

Siena
Siena

I know two people with this dilemma. One did her bachelor’s late in life and had a couple job offers before graduating BUT applied for grad school because they offered 100% full assistantships (like scholarships except you have to do graduate asst. work while getting your degree). The irony is she will probably get paid similar to what she would’ve had she not gone back to school, but this way she will be able to get her master’s without paying any tuition. Someone else I know did 1 year of graduate school but left to take a job offer. It’s… Read more »

Mike Huang
Mike Huang

I definitely don’t want to go through college right now, but education is such a must these days. People have brought up the standards including Asians (I’m Chinese too) and it just sucks for some of us.

-Mike

Siena
Siena

My other solution (it might be a crazy one) but see if you can get a job on campus (I mean an office position, asst. to professor, researcher etc, PR work, computer/tech work . . . ) Someone I know got a $12/hour job doing PR work on campus but ended up later applying to grad school there and because of her job, got an 80% tuition reduction BUT she had to work full-time (at least 30 hours a week) to maintain that discount. I also know someone who was assistant to one of the deans and she got the… Read more »

Andrew Skujins
Andrew Skujins

I guess that it depends on the field in which you are interested in… you could always do a net present value calculation.

http://en.wikipedia.org/wiki/Net_present_value

Jess
Jess

I would check with your school department to see if it offers any sort of tuition reimbursement or assistance plans. My former high school gets vouchers to take classes at Northeastern University for free. They’re released to teachers first, and then students and residents can take advantage (they always have extras). I took a class on Personal Finance over the summer, and now everything I’ve been reading here and in other similar blogs makes much more sense!

Kim
Kim

A great topic, one I have been thinking about ever since I hit my 5 year reunion time from undergrad! Recently I enrolled in community college. It was a long road to this decision but finally I decided on a goal that offered no other path than more education. Originally, I desperately wanted to be a social worker and felt I had to have the MSW to get there. You can’t get that at a community college, and I still am paying off my B.S…. so I did not relish the idea of going another $40,000 into debt to finance… Read more »

CJ
CJ

I am considering going back to school at age forty. Looking at my situation purely financially, there is no question that going to school would be a foolish decision. My income in my new field would be about the same as it is now. Depending on which school might accept me, the degree could cost over $100K in tuition alone, and the lost wages are huge. However, I could pay for it entirely out of savings without touching retirement accounts. I would have much more flexibility in terms of where to live than I have in my current field, so… Read more »

ClickerTrainer
ClickerTrainer

I have a Master’s, but haven’t worked in my field (chemistry) for 20 years. I’m a web programmer instead. But the degree still matters — I wouldn’t be the supervisor without it. And that translates to an extra 30K/year.

SRD
SRD

I curse writing my student loan check every month, but the opportunities my PhD has brought make it worth every penny.

We figured how much I’d make given the career path I was on compared to how much I’d make after school (minus how much I’d lose while in school). The math made it clear that if I could find a job post-graduation, it would be worth it.

Don’t forget to consider all the other costs of going to school full-time, like books and photocopies, coffee and convenience foods, and possibly, therapy!

AquaQuant
AquaQuant

Whatever you do, dont’t go to law school (unless it’s NYU or Ivy League). My friend was a financial analyst making $40K when she decided to go to a private law school at the age of 25. Just before graduating, she asked her job placement advisor what the average salary for starting attorneys might be. The answer was 35K/year. Sure, law schools websites tell you that starting salaries are over 90K. What they don’t tell you is that those are the salaries of a few of their seasoned graduates who filled out their schools’ surveys. The ones who didn’t fill… Read more »

Disgusted Pathologist
Disgusted Pathologist

Keep in mind that your compensation does not always coincide with your job satisfaction. I am a 46 year old female physician (pathologist), extremely highly financially compensated, who is completely unhappy and disgusted with my chosen profession. I spent 7 years in college, 4 in medical school, and 5 in residency, finishing with approx. $120,000 in student loan debt. I just paid off the last of the debt last year at the age of 45. I am so disgusted with the current state of pathology in general, and of the practice of medicine that I am about to embark on… Read more »

sven
sven

I think teachers are not paid enough and that the extra education to earn those few bucks for such a tough job, I think it’s a must, he will pay of the deb very soon once he hits it. The last post is just so right, you can’t put a price on education, it’s just too misguided to finance and math themes, there is no sane reason to go into social jobs from a debt perspective.

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