After graduating from college, many Americans face the difficult decision of whether to continue their education or gain work experience. Some insist that considering the rising cost of tuition and insurmountable student loans, a master’s degree just perpetuates indebtedness. However, many critics fail to consider the reality of stagnant real wages and distorted unemployment rates.

As of September 2020, the U.S. unemployment rate stood at about 7.9%, according to the Bureau of Labor Statistics. The current high rate is partially due to the economic impact of the global coronavirus pandemic; before the crisis hit the U.S. in March, it was 3.5%. As of 2019, the unemployment rate for graduates with a bachelor's degree was 2.2% compared to 2.0% for master’s degree holders.

In addition, the median weekly earnings for those with a bachelor's degree were $1,248 versus $1,497 for those with a master's degree, which shows the value of a master’s program. Additionally, some fields, such as education and psychology, require master’s degrees and beyond just for entry-level positions. After completing college, individuals should consider a number of factors when deciding to invest further in their education and pursue a master’s degree.

Key Takeaways

  • The factors to consider when deciding to pursue a master's degree are the associated costs, job prospects, salary, debt, and potential impact on savings and retirement.
  • While some insist that a master’s degree just perpetuates indebtedness because of the rising cost of tuition, they may fail to take into consideration the reality of stagnant real wages and distorted unemployment rates.
  • In many cases, considering lifetime earnings and future job prospects, it is beneficial to continue education beyond a bachelor’s degree.

The Case for a Master’s Degree

The factors to consider when deciding to pursue a master's degree are the associated costs, job prospects, salary, debt, and potential impact on savings and retirement. From a financial perspective, the master’s degrees with the highest returns are nurse anesthesia, telecommunications engineering, and finance and economics.

According to a report by PayScale for 2017, engineering schools are highly ranked for return on investment (ROI). The average net ROI for engineering schools is $653,000, compared to less than $157,000 for liberal arts, religious, or arts schools.

Besides choosing a field of study, students must decide between attending a public school, private school, or an online program. According to the National Center for Education Statistics, for the 2017–2018 academic year, undergraduate tuition, fees, room, and board were estimated to be close to $20,598 at public in-state institutions, and $44,662 at private nonprofit institutions.

However, the gap in earnings between equally ranked public and private schools is less. According to Lexington Law, a company that helps people overcome debt, over a lifetime, you will earn about 10% more income if you go to a private college, enough to retire about three years earlier.

But despite the small difference in the ROI, private universities often provide more prestigious research and academic opportunities. For example, a majority of the winners of the Nobel Prize in Economics have been affiliated with the University of Chicago and other private universities.

Recently, online degrees have become a viable alternative to traditional brick and mortar universities. Common misconceptions about online universities are that the programs are cheaper than degrees from physical schools and that they lack credibility. The average in-state cost per credit for an online program was $316 in 2019 compared to $311 per credit at a physical campus.

Furthermore, since online universities and their brick-and-mortar counterparts have relatively similar costs, they also have similar returns. Assuming the online degree is obtained from an accredited university with an established brand and traditional campus, it can be presumed that your results in the hiring process will be similar if you obtain a master’s degree online versus earning a degree from a traditional institution.

The Case for Work Experience

The primary benefit of forgoing a master’s program is saving money. The website Finaid has a cost projector calculator that is intended to help students and families determine how much school will cost. According to Finaid's custom calculators, the cost of a two-year master’s program can range between $30,000 and $120,000.

In addition to avoiding tuition payments, joining the workforce gives individuals the opportunity to earn money.

The average salary for graduates with a bachelor’s degree is approximately $53,889 for the class of 2019, although this number can be significantly higher or lower depending on the major.

Besides savings and salary, joining the workforce increase chances for promotions and networking opportunities. Computer science and engineering majors typically earn $76,986, while social sciences earn $50,009.

Student Loans

Student loans continue to plague young Americans. For many, attending a bachelor’s or master’s program requires loans to cover the cost of tuition and living expenses. Currently, total U.S. student loan debt stands at $1.544.8 trillion. The College Board reports that among those who finished a bachelor's degree in 2017-2018 with debt, the average amount of that debt was close to $29,000.

Since most undergraduate students are shouldering considerable debt, many cannot even consider pursuing a master’s program. However, those who take the plunge will find that the median indebtedness of a graduate student is $52,141.32.

The Bottom Line

Deciding whether to join the workforce or obtain a master's can be difficult. When choosing a master’s program, it’s important to consider job prospects, ROI, and tuition costs. Quantifying these factors can help individuals calculate a cost-benefit profile for a prospective master’s program or work experience.

In many cases, considering lifetime earnings and future job prospects, it is beneficial to continue education beyond a bachelor’s degree.