How to decide if graduate school is worth the moneyChen Wan Lim
There are various reasons why people opt to go to graduate school for an MBA or a Masters’ degree. For some people, obtaining a postgraduate degree is a prerequisite for career advancement while for others, it’s simply about obtaining knowledge and having the whole ‘postgraduate experience’. Signing up for a postgraduate degree is no easy decision as there is a heavy financial cost attached to it. So how then to decide if graduate school is really worth the money?
Most people decide on graduate school based on their expectation that a postgraduate degree will help them with their career advancements. Most common reasons given are either to help them transition from a technical role to a managerial role or to help them switch career fields. Hence, you will need to decide first if a postgraduate degree will be a good career fit for you. If you are currently an engineer by profession and intend to climb up the corporate ladder to a managerial role in an engineering company, then an MBA will be a perfect fit for you. Also, you will need to decide if a postgraduate degree is even required for you to advance in your career.
Personal finance goals
Admittedly, people work for money and the higher you advance in your career, the more you are compensated. Do some homework and contact some job recruiters to get a range of salary that you might be getting with a higher position and a higher qualification. As an example, if a postgraduate degree for two years costs RM50,000 then you might want to gauge and decide on the payback period you will need to recoup that amount – the shorter the payback period, the better.
Here are some simple ways to calculate the return on investment (ROI):
Salary projection – Log on to local online job portals and search for similar jobs with higher qualifications and higher positions. Alternatively, get in touch with recruiters to check your market worth if you have advance degrees. Then calculate if the increment you will get is worth the money invested into obtaining a postgraduate degree. If the increment you can potentially get is sufficient to cover the cost of the degree in a couple of years, then perhaps it’s a good investment after all.
Debt financing – If you happen to need to take on a loan to finance your postgraduate degree, then work out the monthly repayments and calculate the entire cost inclusive of interest payment you will need to pay by the end of the loan. If your increment and bonus for the first year after completing your degree is more than sufficient to pay back your monthly loan instalments, then it’s a positive return on investment for you.
The caveat to note here is that these projections and assumptions could be wrong. You might not have the increment you desire and you might not be able to have a positive ROI. Therefore, be conservative in your forecasts.
If you are a business person or if you are already sitting in a managerial position of a company, then decide if a postgraduate degree will value add to your business. Perhaps a degree on its own might not elevate your career further at this current point but the connections and network that you will build in business school will help in expanding your business and even open doors for new business ventures.