In the education sector, there’s a huge debate regarding whether or not earning potential with a master’s degree actually rises. In the past, earning a business or graduate degree was sure to increase base salaries and the chances for promotion. Unfortunately, master’s degrees don’t hold as much weight in the business world as they once did.
Today, with such a huge stock of college graduates in the workforce searching for employment with a master’s degree or higher, applicants aren’t always guaranteed to land a job or make more than fellow members of the workforce with a lower level of education. To assess whether or not there’s really an increase in earning potential with a master’s, students need to do a thorough cost-benefit analysis.
Assessing the Cost
Students who attend post-secondary school to earn a 4-year degree often have more financial help from their parents than graduate students do. Due to their age at the time of entering a master’s degree program, The Washington Post states that 40 percent of the student debt on file now is accrued by adult graduate students because the cost of attending a master’s degree program is so high.
Average Cost of a Master’s Degree
Anyone who is contemplating the idea of returning to school should know how much that entire endeavor is going to cost them. Factoring in the costs before a potential student assesses the increase in earnings will be imperative to get a look at the big picture.
Unfortunately, pinpointing how much an actual master’s degree student will spend to study 2 more years of focused curriculum isn’t easy. There are private schools with exorbitant tuition fees, public schools with different rates for residents and non-residents, and special MBA programs where fees are higher than average. That’s why just an extra two years in school can cost grad students between $30,000 and $120,000 total, according to FinAid.org.
Adding In Opportunity Costs
Students who study business coursework or economics are sure to learn about the term that is referred to as opportunity cost. It’s not only important to look at the tuition and fees, it’s important for anyone who wants to be informed to factor in the indirect costs of attending school that are created by making the choice to earn a master’s degree.
There are a few different indirect opportunity costs that prospective students might not highlight. Perhaps the largest is the fact that students must attend two more years of school and forgo the income that they could have earned after completing just a 4-year program. According to Time, the average graduate earns $50,556 with a bachelor’s degree. If someone with a bachelor’s degree earns around $100,000 in two years, they will be missing out on this income to attend school. That is another cost to consider in addition to the total cost of tuition.
How Much More Will a Graduate Earn?
The big question is how much more someone will earn a Master’s degree. There’s no denying the fact that alumni with a graduate degree are going to earn more than someone who hasn’t spent as much time in school, but will the difference make up for the costs of attending school is the appropriate question.
As previously stated, bachelor’s degree holders will earn an average of around $55,000 per year. In comparison, a professional with a master’s degree will make an average of $69,732 per year, according to data compiled by SmartAsset. That is a difference of just under $15,000 per year.
Assuming that it costs a student $60,000 to attend school and they lose $90,000 in income for the time that they are enrolled in school, it could take that student around 10 years to pay off the expense of schooling, without factoring in interest, with their increased salary. While the earning potential with a master’s degree is higher, students need to be sure they’ll be in the workforce long enough to benefit from the increased earnings.