This year, I talked someone out of going to graduate school.
Actually, he already was enrolled in a prestigious MBA program and on the way to accumulating about $100,000 in debt, including interest.
With one semester completed, he and his wife came to the ministry I direct. They already were struggling under the weight of credit card and undergraduate student loans.
As I usually do, I asked him a number of questions. He couldn’t answer most, and that led him and his wife to realize he couldn’t afford the program.
Now, 10 months later, the man and his wife have paid off more than $21,000 of the loans. By next year, they should be debt-free. An MBA still may be in his future, but without the heaviness of debt.
I am an advocate for higher education. I have a master’s degree in business, and I studied for it not because it was going to directly increase my earning power but because I wanted the knowledge. My husband has an MBA. We both obtained our advanced degrees without resorting to loans.
Earlier this year, a brief about the state of graduate school debt released by the New America Foundation addressed the question of whether there is too much borrowing for expensive graduate programs because such debt has surged in recent years.
“While a graduate or professional degree boosts a student’s earnings prospects and the economy at large, it is not the foundation for economic opportunity and middle-class earnings that a two- or four-year degree now provides,” wrote the report’s author, Jason Delisle, director of the foundation’s Federal Education Budget Project.
You know the $1 trillion in student loan borrowing that is of concern to many of us? About 40 percent comes from loans to finance graduate and professional degrees, according to the report.
In looking at data from the Department of Education, Delisle found that the median level of indebtedness for a borrower with a master of arts was $59,000 in 2012, up from $38,000 in 2004. And that’s after adjusting for inflation. There were similar trends for other master’s degrees, such as in science or education.
There are plenty of studies that show that people with advanced degrees have higher earning potential. But lost in this optimistic message are the people who get a degree and the debt but not a significant pay increase. Or the debt takes up such a high percentage of any net salary bumps that it is years before the degree-holder sees a return.
Here’s a key observation from Delisle’s report: Students pursuing a master’s or professional degree already have an undergraduate degree, and therefore they “should be far more informed consumers.”
Yet often they are not. I’m concerned that many people don’t do much research to determine if their degree is right for the career path they want and if it’s worth the cost of the debt. In my experience, they make their decisions based primarily on sales pitches from the schools selling the graduate programs.
Here are the questions I ask when people tell me they are pursuing an advanced degree and plan on taking on substantial debt to do it:
● Whom have you talked to other than the recruiters for the graduate school?
● Have you talked not just to graduates of the program you’re considering but to folks with advanced degrees in the same field to see if the academic work increased their incomes?
● Have you considered whether you can handle debt payments if you don’t get a boost in pay?
● Have you calculated the return on your investment of time and debt? Include all the expenses of graduate school, including any salary you had to forgo to pursue the degree.
● Have you talked to any hiring managers to determine how much an advanced degree affects their decisions for the type of positions you what to pursue? Is the degree even required for the job you’re seeking?
● Have you also talked to the hiring managers to determine if they prefer any one school’s program over another’s? The point of this question is to determine if you really need a pedigree degree or if one from a more reasonably priced institution would do just fine.
● Have you considered any certificate programs that might give you a better set of skills that can lead to pay raises without the larger cost of a graduate program?
Delisle says the debt data shows that “graduate and professional students are likely borrowing at levels that will lead to substantial waves of student loan forgiveness in the coming years.”
I’m not saying graduate school isn’t worth your effort. I’m just saying be smart about the decision. Count the cost.
Readers may write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or firstname.lastname@example.org. To read previous Color of Money columns, go to http://wapo.st/michelle-singletary.