Does it Pay to Go Back to School?

Wondering if you should go back to school? Get Money Girl’s tips to help you decide if getting more education will really pay off. 
Laura Adams, MBA
5-minute read
Episode #284

Does it Pay to Go Back to School?


I received an anonymous email that asked:

“I recently graduated with my bachelor’s degree and started repaying my student loans. But now I’m thinking about getting a master’s so I can earn more. Is it better to wait until I pay off my current loans to go back to school, or to go now and add more loans to my existing debt?".

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Whether you should go back to school is an important question because it affects many aspects of your life. Today we’ll cover the pros and cons of returning to the classroom. Plus, you’ll get 5 tips to know whether getting more education will pay off, especially if you need to borrow money to make your education dreams a reality. 

Pros for Going Back to School

Paying for education is an investment in your future that usually pays off. Did you know that having a bachelor’s degree is worth almost $1 million more in lifetime earnings, on average, than having a high school diploma? 

Going the extra distance for a master’s degree, gives you an average of $1.3 million more. And if you really want big bucks, doctoral degrees and professional degrees can give you over $3 million more than if you don’t continue your education after high school.

Not only does higher education help you earn more, but the recent recession proves that it also makes you more employable. As of July 2012, the unemployment rate for a high school graduate was 8.7% compared to 4.1% for a worker with a bachelor’s degree or higher. 

In addition to having more money and security, it can be personally rewarding to go back to school. Having the opportunity to broaden your interests or study a subject that you love is incredibly exciting. Additional education also gives you more confidence, contacts, and experiences to draw from for the rest of your life. 

Cons for Going Back to School

As numerous as the arguments are for heading back to school, there are negatives to consider. The biggest downside is the cost. Higher education gets more expensive every year and few people can foot the bill without going into debt.

Although, as I mentioned, higher education can be the key to earning more money, it could take many years for your income to blossom. Until then, you could feel stretched thin to pay bills and student loans. 

Related Content: Tips to Tackle Student Loans and Get Out of Debt

Another consideration when you go back to school is the income you give up if you have to quit work to become a full-time student. Also, leaving the work force for several years could be detrimental to your career in the long run.

A psychological consequence of investing lots of time and money into getting a degree is that you may feel chained to a particular career if it comes with a hefty educational price tag. That could make it difficult to change jobs later on if you get disenchanted with the work.   

We all know wildly successful people—like Richard Branson (the billionaire founder of Virgin enterprises), Dave Thomas (the billionaire founder of Wendy’s), and Mark Wahlberg (Oscar-nominated actor and entrepreneur)—who never finished high school. Depending on your career or goals, you might not need a degree to earn more or to achieve success. Just remember that these instances where lack of formal education leads to big money are rare.

Tips for Going Back to School

If you’re wondering whether going into debt for more education will really pay off, here are 5 tips to follow:

  1. Ask your employer. Meet with your boss to find out whether he or she believes getting an additional degree can pay off in your company or industry. Get the opinions of people you trust about whether more school is the key to landing a better job or a promotion.  

  2. Get tuition reimbursement. If you’re employed and want to continue working during school, find out if your company pays education expenses. Tuition reimbursement programs typically pay a portion of the cost of classes related to your job if you maintain a certain grade point average. When I got my MBA, I was working for a Fortune 500 company that paid about 30% of my total tuition. You get additional education and become more valuable to your company at the same time!

  3. Research potential income. If you’re considering a degree for a brand new field, get familiar with its average salaries. Check out resources like payscale.com, salary.com, and the Occupational Outlook Handbook, which is published by the Bureau of Labor Statistics at bls.gov.

  4. Evaluate affordability. There’s a general rule of thumb that you should never take more in student loans than your expected annual salary after school. For instance, if you expect to make $50,000 a year immediately following graduation, limit your total education debt to $50,000. 

  5. Choose the right time. Just because you want to go back to school doesn’t mean that now is the best time. Consider what you’d have to give up in order to have enough time to attend classes and study. Would you still have enough time for work and family obligations? 

In my book, Money Girl’s Smart Moves to Grow Rich, I recommend a strategy that I call the Plan of Thirds to make paying for education more manageable. The plan is to save 1/3 of the cost before attending school, earn 1/3 while attending school, and pay the final 1/3 in student loans that you get during school and pay off after graduation. Click here to download 2 free book chapters! 

No matter your professional or personal motivation for going back to school, make sure that you can complete the program on time and justify the price. Taking on too much education debt can be detrimental to your financial life—but taking the right amount can open career doors that make it painless to pay off.

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.