According to the U.S. Census Bureau, nearly one of every three people in the United States possessed a college degree as of 2008. Because many companies in the U.S. are looking to reduce their cost structures by moving manufacturing and process jobs overseas, many professionals undergo the competitive nature of the workforce. One avenue for distinguishing oneself is to pursue and obtain a graduate or professional degree (such as an MBA, law degree or master's degree).
The 2008 U.S. Census Bureau estimated that roughly one in 10 people in the U.S. possess a graduate degree or doctoral degree. And even for these people with advanced degrees, the workplace can still be highly competitive in a metropolitan city. In WashingtonD.C., about one in four has a graduate degree. In San Francisco and Seattle, that number is approximately one in five.
The wide diversity of occupations in the U.S. is reflected in the large number of graduate and professional programs offered in colleges, universities, and technical schools across the country. A professional can pursue an MBA, law degree, a master's degree in a particular field, or a PhD. Most graduate degrees take between one and three years for program completion on a full-time basis, and PhDs can often take longer than six years to finish. Professionals who contemplate earning an advanced degree should have a very good sense of their career goals and how grad school can help them get there. Typically, programs are either academic or research-oriented (i.e., a master's in history), or are biased towards practical application (i.e., law school or an MBA). (Find out how to fast track with a double major, and give you career the edge it needs, read 3 MBA Double Majors That Boost Your Value.)
Given that costs can spiral up into the six-figure range, these are not the programs in which to soul search. Prior to making a decision, it is best to talk with several people who have undergone the programs and who work in your desired profession before making that expensive plunge. Additionally, it is important to note that an academic institution or professional school may advertise tuition costs and prospective students may associate these amounts as constituting the vast majority of the expenses.
However, grad school has many hidden costs. These include:
- Opportunity costs. Especially if you pursue a full-time program, chances are you'll have to quit your job and not have any salary (or miss out on bonuses, 401k matching, and promotions) for the duration of the program. And that's assuming you find an appropriate position upon program completion.
- Testing preparation (such as LSAT or GMAT review, instruction workshops and/or coaching expenses), fees for taking test scores, application fees and travel expenses for interviews.
- Required materials, such as laptops, books, school supplies, laboratory fees or subscription costs.
- Required travel, such as international trips or conferences.
- Room and board.
- Family-related expenses (i.e., babysitting).
As alluded to earlier, graduate programs can generally be classified into two categories: academic/research-oriented degrees (such as a master's in history or political science) and practical, application-based professional programs (such as a master's in taxation or mechanical engineering). (When adding up tuition, books, rent and foregone salary, an MBA can cost as much as a house. Is it worth it? Read The Real Cost of an MBA.)
The Academic Degree and the Professional Degree
Academic-type degrees typically have a more competitive process of getting into the program, and secondly, of securing funding that can help pay for grad school. Deans at research institutions have different objectives and mandates from deans or directors at the trade or professional schools. Usually, the state mandates educational leaders (at public institutions) to produce high-caliber researchers and scholars who will continue to push forward the frontiers of knowledge in a variety of subject areas.
With geopolitical, regional economic and budgetary considerations in mind, those areas that can foster statewide growth and prosperity receive prioritized funding. At the applicant level, that translates to a competitive application (and filtering) process in terms of securing coveted seats into the program as well as getting partial or full funding support to pursue advanced scholarship. Deans and professors may also encourage grad students to pursue a PhD instead of just a master's degree, as the former is viewed as a more credible path to producing top-notch researchers. Obviously, a PhD can also significantly increase the cost of gad school. (With job opportunities rising daily, find out if you need an MBA to stay competitive, see Should You Head Back to Business School?)
At many of the top 30 academic institutions, it is not uncommon to have a 10% acceptance rate from highly qualified applicants. Those who are accepted can vie for limited scholarships, research grants or financial support from the dean or program director. Scholarships can come from the college, the state, a government agency, a nonprofit organization or from an endowed scholarship provided by a donor, and can range from a few hundred dollars to several thousand per semester. Exceptional program participants or highly gifted students can see their entire grad school costs paid for but these are pretty rare (such as Rhodes or Truman Scholarships).
High priority areas can provide an opportunity to secure a research grant (such as groups supporting cancer research). Universities can also award fellowships to encourage gifted scholars to apply to and/or enroll in their program, who might otherwise have been discouraged to enroll in the program due to financial constraints. Grad students may also generate income by serving as teaching or research assistants, with pay generally ranging from $1,000 to $2,000 a month for 20 or more hours of work per week.
The Professional Degree
Professional programs (such as an MBA, law school, a master's in actuarial science or a master's in pharmaceuticals) are tailored for immediate and practical application in the real world. Securing funding from an outside organization can have a much more directed objective and anticipated benefits. A military branch or government agency may be lacking in financial analysts, legal counsels or accountants, and through an internal program may be willing to partially or fully pay for a student's way through grad school so as to secure the needed professional upon graduation. Such arrangements require that the graduate commit a few years of association with the sponsoring organization.
Certain branches of the U.S. military are constantly searching for prospective officers, and thus, the reserve officer training corps (ROTC) may also be a way of getting financial support for grad school in exchange for part-time work for the duration of grad school as well as a commission as an officer upon satisfactory completion of the degree. (Find out how to gain valuable work experience and cut the cost of your education, read Reduce Tuition With a Work-Incentive Program.)
Companies can also partially or fully sponsor a student's grad school undertaking. For instance, national accounting and consulting firms are always recruiting for accountants, tax specialists and financial analysts and may be inclined to provide financial support for students wishing to get a master's in accounting or taxation. With company sponsorship, they are easier to attain if the professional program conveys immediate and practical benefits during and/or upon completion of the degree.
Such support typically originates from the annual budget of the sponsoring manager. For instance, a top performer may wish to obtain an MBA by going to evening classes, while continuing with his/her day-time responsibilities at work. His/her manager can allocate funds in order to partially or fully defray the cost of the MBA so that the top performer can further elevate his/her career by obtaining additional skills. In turn, the manager can be seen by executives as an effective cultivator of future leaders within the company.
There are a variety of stipulations for these types of corporate sponsorships. Commonly, students are expected to obtain a minimum grade and continue to meet performance expectations at work. Some companies also set annual maximum tuition reimbursement benefits. (Universities don't have a monopoly on information. Advance in your career without going back to school, see Alternatives to Business School.)
Securing funding support may not be limited to an advanced degree. Depending on the sponsoring organization, you might also be able to have test preparation materials (such as CPA reviews) and certifications paid for. Many of these professional certifications, such as the CFA and CPA, have a station just as elevated – if not more so – than a graduate degree. In the real world, the rule of thumb is: if a certain skill is beneficial to the organization, its managers will find a way to bring that talent into the fold. It's your job to take the initiative and secure the funding for a professional degree. People will actually pay for you to enhance your career! (A couple of letters can mean a big difference. Find out which designation you need and how to get it, read CPA, CFA or CFP - Pick Your Abbreviation Carefully.)