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Investing in a graduate-level education

Last fall, in an SMI cover story, we asked Is a College Education Still Worth the Investment? Now, Morningstar is taking the question to the next level (literally) in an article titled, "Is Graduate School a Good Investment?"

Excerpts:

Is graduate school worth the cost?... Tuition costs vary widely between programs, but can run from $20,000 to over $40,000 each year, especially for business, law, and medical schools....

However, looking at tuition cost in isolation under-represents the true cost of attending. It's not just a matter of paying tuition at face value — other costs of attending, including books and room and board, can tack on thousands of extra dollars. Going back to school also involves an opportunity cost: You're giving up years of income while you're in school....

Your return on your education investment depends on how much debt you take on, the salary you sacrifice to go to school, what job you come out with, and the trajectory of your upward-mobility after your first position.

The article offers seven steps aimed at helping people make a wise decision about grad school. Here are a few of them:

• Don't jump in. Think about your career goals before returning to school and figure out if more education is the only way to get where you want to be. It's a bad idea to take on debt without a clear goal of what you're trying to achieve.
• Analyze graduate school debt versus job prospects.... This calculator from Kiplinger can help you evaluate how debt plus a higher paying job compares to your existing salary.
• Minimize costs where possible.... Consider getting a roommate and living somewhere inexpensive for a few years.
• Check with your employer if you're in a career that aligns with your educational goals. Some employers with help you pay for part-time programs if you continue working full time, while others will pay for full-time programs if you agree to certain conditions, such as working for the company for a number of years after you graduate.

In a sense, the decision about whether or not to invest in a graduate level education (or even an undergraduate education) is like every other investing decision. Going to grad school involves giving up something now — namely time and immediate income potential — in hopes of having a payoff later in terms of career satisfaction and higher income.

If you're wrestling with a decision about graduate school, we suggest you follow SMI's four guidelines for determining the "right" thing to do when making investing decisions:

1. The right investing decision is one consistent with a specific, biblically sound long-term strategy you've adopted.
2. The right decision is one you have taken time to pray over and about which you have sought experienced Christian counsel.
3. The right investing decision is one where you understand what you're doing, why you're doing it, and how you expect it to improve matters.
4. The right investing decision is one that is prudent under the circumstances.

One more guideline: As you wrestle through your decision, trust God to work all things together for good.

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