You’re a college senior, a few exams away from that engineering diploma, and you have to decide whether to take a job or go to graduate school. To choose wisely you must estimate the likely economic return on your investment.
It’s not an easy calculation. The details will differ from place to place, school to school, and person to person. To simplify things, we’ll use average U.S. costs and benefits.
Let’s look first at the benefits of a graduate degree. In 2007, a new master of science in electrical engineering graduate earned more than US $66 000, compared with about $55 000 for bachelor’s degree recipients, according to the National Association of Colleges and Employers in Bethlehem, Pa. The extra bump from a doctorate was about the same: in 2007 new Ph.D. salaries averaged almost $76 000.
For those with graduate degrees, the good news only gets better over time, because salaries for those with grad degrees rise more and for a longer period. That might make you believe that getting an advanced degree is a no-brainer.
Not so. Even the most bare-bones calculation needs to include three additional factors—the cost of tuition, the cost of not working, and the value of money. Tuition for graduate studies averages $24 000 a year at a public university, according to the National Science Foundation’s latest report, ”Science and Engineering Indicators 2008.” Not working for a year costs you on average $55 000 (before taxes). And a dollar you spend today is worth a lot more than one you will earn decades from now, given both inflation and the real rate of return on investments.