Is Grad School Worth It? How to Do the Math

  • By Rachel Rabinovich, CFP, Society of Grownups
  • June 07, 2016

If you’re on the fence about grad school, doing the math can give you clarity, no matter your life stage. Whether you’re a student thinking about continuing school after undergrad, looking to advance in your current career, or considering a total shift in career, the decision to attend (or not) is a highly personal one that requires careful thought and planning. So dust off your calculator, polish up your research skills, and read on for some help in deciding whether grad school is the right fit.

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Tally Up the Cost
One key component of the grad school decision process is understanding how the investment you’re planning to make may affect your career success in the long run. Tuition and books aren’t the only costs that come with grad school — it can get expensive in some unexpected ways. Here’s what to consider:

  • The cost of living if you have to move to a new city
  • How a school schedule will affect things like cooking at home versus eating meals out
  • Health insurance costs — especially if you will no longer be covered under a workplace insurance plan
  • The cost of test prep for an exam like the GRE, GMAT, or LSAT, plus the cost of the exams themselves

With that in mind, use this equation to help determine the true cost of grad school:

  1. Take the salary you were making prior to grad school — or, if you’re just out of college, look up the average salary in your city for a job you could apply for now — and multiply it by the number of years you expect to attend grad school.
  2. Add in your expected total tuition and living expenses (don’t forget the hidden expenses we just talked about).
  3. Add in the amount in loans you’re planning to take out.
  4. Finally, subtract any income you expect to make while attending, if you plan to work.

This number can help you visualize your investment in school.

Is it Worth It?
Next, you’ll want to weigh your investment against what grad school will give you in return. There are several online resources that can give you a sense of the opportunities for different careers. One great tool is College Scorecard, which provides an average annual cost of attending a given school, an average salary after attending, and loan and debt information — among other helpful numbers. You can also check current salaries for specific job titles on sites like Glassdoor,, and to get a better idea of what you might be making a few years down the road.

Once you have a stronger sense of your earning potential and loss of savings, determine whether you can recoup your losses within a reasonable period. If you’re planning to take out student loans, consider their affordability against your projected income, especially early in your career. Don’t forget payments for any deferred undergraduate loans. The Department of Education’s federal loan Repayment Estimator is a helpful way to better understand what your post-grad-school financial situation will look like.

If the numbers seem overwhelming but you think grad school might be worth it, taking a close look at your personal spending habits and creating a budget — before you head to campus — can help you manage your costs. Spend a couple of months tracking your spending habits and consider whether there are ways to cut back. While you’re at it, open a grad-school-specific savings account and set up automatic transfers for the money you have free in your current budget.

Consider Campus Lifestyle — in the Classroom and Out
If you’ve decided to apply and narrowed down your list of target schools, phase two of your research begins. Understanding the campus environment and the student community will help you paint a picture of your life at a specific school — and help you budget for the next few years. Consider talking with professors and students to get their take on your program, including the projects you can expect to be a part of and research or fieldwork opportunities outside the classroom.

While it’s possible to work while attending grad school full time, be honest with yourself about your ability to balance both commitments. Teaching and research assistant positions may be available for your chosen program, but it’s smart to get a clear sense of the time commitments these positions require — and researching how easy these jobs are to come by in the first place.

Exploring Alternative Options
It’s also okay to decide that grad school isn’t the best fit for you right now (or at all). That said, if you’re still committed to furthering your education, there are plenty of great ways to grow your knowledge and experience or prepare to continue your education down the road.

If you do have your sights set on grad school in the future, it’s helpful to put away a small amount of money every month so you’re ready to handle the costs when the time is right. You can also focus on improving your financial situation in general by paying down any debt as fast as possible and building an emergency fund.

You may also consider the pros and cons of attending grad school part-time while working. This option lets you manage costs more easily and makes it more realistic to cover tuition as you go, rather than having to take out loans. In certain cases, employers may also offer tuition reimbursement. That said, get honest about how long it’ll take to complete your degree this way, and whether maintaining any work-life balance will be realistic.

Finally, if you decide grad school isn’t the best fit but still want to continue your education, free online courses and local classes like those offered by General Assembly or Startup Institute are a great way to supplement your experience without putting a strain on your finances. These classes can also help you explore new topics if you’re interested in pursuing different fields of study from your undergraduate major or considering a career change.

Before joining the Society of Grownups, Rachel Rabinovich was a financial advisor with Ameriprise Financial, where she helped clients manage their investments with an emphasis on sustainable and responsible investing.

The information in these materials is only intended to provide general education. It's not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation. If you need recommendations geared to your personal financial situation, schedule time with a financial planner. Any third party resources or websites referenced above are not under Society of Grownups’ control. We cannot guarantee and are not responsible for the accuracy of the resources, websites, or any products or services available through such resources or websites.

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