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.

The U.S. unemployment was at 3.7% in September 2018, according to the Bureau of Labor Statistics. The unemployment rate for graduates with a bachelor's in 2017 was 2.5% compared to 2.2% for master’s degree holders. In addition, the median weekly earnings for those with a bachelor's degree were  $1,173 versus $1,401 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.

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, according to Monster, 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. (For more, see: "The Benefits of an Accelerated Bachelor's/Master's Degree.")

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 2015 to 2016 academic year, undergraduate tuition, fees, room and board were estimated to be close to $17,000 at public institutions, $43,000 at private nonprofit institutions and $24,000 at private for-profit 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. However, 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 $277 in 2013 compared to $243 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, recruiters have reported no negative hiring effects as a result of obtaining a master’s online. (For more, see: "How Much Is a Graduate Degree Worth?")

The Case for Work Experience

The primary benefit to forgoing a master’s program is saving money. On average, 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 $50,219 for the class of 2016, although this number can be significantly higher or lower depending on the major. Computer science and engineering majors typically earn $72,000 while humanities and social sciences earn $41,000 to $47,000. According to estimates from 2015, an additional two years of work experience will lead to average annual pay raises of 3%. Besides savings and salary, joining the workforce increase chances for promotions and networking opportunities.

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 $1.5 trillion. The College Board reports that among those who finished a bachelor's degree in 2016 with debt, the average amount of that debt was close to $28,500. 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 $57,600. For the 90th percentile, debt can exceed $150,000. (For more, see: "An Introduction to Student Loans and the FAFSA.")

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.