There are many positives associated with earning a graduate degree including the ability to move into a higher-paying field, start a career you are passionate about and work in an industry that excites you. You might feel ready to go back to school, but your bank account is hesitant about assuming grad school expenses. How can you know if attending graduate school and earning a degree will provide you with a solid return on investment?

Tip One: Conduct an Expenses Analysis. Linda Abraham, founder of Accepted, said most people pursue a graduate education for professional advancement. Grad school is considered an investment and students need it to pay off financially as well as personally.

To determine if your graduate degree will pay off, Abraham recommends conducting this analysis to estimate the following expenses:

• Out-of-pocket costs of the graduate degree: This includes tuition and any other school fees.
• Opportunity cost of the degree: This is the income the student earns by attending school. Abraham said it’s especially relevant for full-time programs where students will not be able to work at all or may only work part time.
• Expected increase in their salary over time as a result of their investment in this degree program

“Unless applicants want to pursue this education purely for personal growth, the expected increase in salary over time needs to be greater than out-of-pocket graduate degree cost and opportunity cost of the degree,” Abraham said.

Tip Two: Determine How You Will Pay For It. Abraham said that in addition to the larger return on investment analysis recommended above, students pursuing graduate school will need to determine how they will pay for their education and living expenses while in school, especially for those attending a full-time program.

Some students may be able to use their savings to pay the fees and support themselves. Others may seek out scholarships, take out student loans or utilize programs offered by their employer to fund their education.

If you do decide to take out loans, Carter Seuthe, CEO of Credit Summit, said graduate school loans are tougher to take on than undergraduate loans.

“Most lenders don’t offer a grace period while you’re in grad school whereas most undergrad loans allow you to finish school and even give you about six months to avoid racking up interest,” Seuthe said. “Graduate school loans start piling up interest immediately.”

Not only do graduate loans start up earlier than their undergrad counterparts, Seuthe said these loans can be riskier. Students must exercise care when, and if, they agree to take out graduate student loans.

“Interest rates are often much higher, the selection of lenders is fairly narrow and you’ll likely need to borrow a larger amount,” Seuthe said.

Tip Three: Are There GA or RA Opportunities Available? You may be able to attend graduate school for free. Jay Zigmont, Ph.D., CFP and founder of Live, Learn, Plan, recommends looking into opportunities for a graduate assistantship (GA) or research assistantship (RA) before you decide to go to grad school.

“Most schools offer GA/RA positions which are part-time (10 to 20 hours per week) and provide both a stipend and pay for tuition and sometimes fees,” Zigmont said.

Zigmont said students able to secure a GA or RA position may be able to go to grad school for free. “You may need to look outside of your major for a position, but it is worth the work,” Zigmont said.

Tip Four: What Are Your Financial Prospects, Both Short and Long Term? There are many financial benefits for students who attend grad school. Melanie Hanson, editor in chief at EDI Refinance, said in many cases the school covers the student’s room and board. Grad students may also receive a stipend for teaching undergraduates along with generous financial aid to pad their budget.

Despite these financial perks, Hanson said students considering graduate school must separate their short-term financial prospects from their long-term prospects.

The long-term prospects are a lot harder, so it’s critical that students exploring a graduate degree know exactly how the degree they are working to earn will help them find employment.

“All of that financial aid will need to be paid off, whether you spend it on high tuition or living expenses, and job prospects within academia are getting harder and harder to find these days, so it’s important to have a clear path to a high-paying job after graduation,” Hanson said.

So, is graduate school worth the investment? Ultimately, this answer will depend on each individual’s unique circumstances and if the career path they wish to pursue requires a graduate degree. Conduct a little careful planning, research and make sure you can answer these questions to determine if attending grad school is the best financially viable option for you.

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