The decision to get an advanced degree is a big one, involving a financial and career equation of money, time, possible advancement, fulfillment, and more. The following are some of the questions you should consider when deciding whether to pursue and how to finance a Masters’ degree!

This article was written by Janet Matta. She has more than 8 years of experience in advising, educating, and consulting on career strategy for young professionals through her work in universities, ed-tech companies, and finance businesses. Her consulting company Career Janet works with early career professionals on career strategy, education choice, and preparing yourself for the future of work.  You can read more of Janet’s writing or book in career strategy coaching sessions at www.careerjanet.com.

What types of funding are available to help finance a master’s degree?

First and foremost, everyone should fill out the FAFSA form online. Even if you have the financial means to pay for all or the majority of the estimated cost of your master’s program, FAFSA provides an opportunity to potentially award scholarships, grants, or federal loans. Scholarships and grants mean less money out of your pocket, and federal loans typically carry a lower interest rate (and have more flexibility on repayment) than private loans.

Another option is personal loans from family. Depending on your family dynamic and whether you and your family feel comfortable loaning money to one another, it can be an advantageous way to finance your program. Obviously, the interest rate associated with this type of personal loan would be much lower than what you’d pay through a bank or financial institution.

Lastly, private student loans are an option. With these, oftentimes students are expected to make interest payments or allow interest to accumulate while still in school, therefore it can be the least desirable way to finance a master’s program. If you’re able to make payments by working part-time, full-time, or engaging in the gig economy with your specific skill set, it can help avoid interest payments compiling while in school.

How much is a reasonable amount to spend or borrow?

It’s dependent upon your unique situation. Many variables are included in this equation: what type of master’s degree you’re getting, what the cost of the program will be, your expected income after completion, your current financial situation, and how you’re financing. To start, get an estimate of what you will need to borrow. Determine the total cost of the programs you’re considering, estimate how much of that you would need to borrow versus pay out-of-pocket, and use a simple loan calculator to determine what your estimated monthly payment would be. Use salary data online (Payscale, Glassdoor, and Linkedin all have tools for this) to determine estimated income upon completion.

That being said, everyone should do research into how borrowing will impact your situation or work with a financial planner and/or career coach to receive advice catered to your unique situation. Common questions to be addressed would be; how long would it take to repay my loan (if financing with loans)? How does that impact my ability to achieve other financial goals? Will completing this degree allow me to achieve my career goals? Will I feel more fulfilled in my work due to the doors that will potentially open once I complete this degree?

Once these questions are addressed, it’s much easier to determine a reasonable cost to finance your master’s degree.

What financial preparations should I undergo prior to starting/applying for a master’s program?

Again, this is largely dependent upon your unique situation. If you’re continuing to work while pursuing your master’s program, you’ll still have an income stream to help pay for living expenses and likely any other expenses associated with the master’s program. However, if you’re going to be at school full-time, you’ll want to ensure you have a large emergency fund in place. Even if you decide to finance the master’s degree with loans, it’s essential to have a cash buffer in place should any large unexpected expenses occur. Rather than having to use further debt to address the expenses (which may be at extremely high-interest rates -> credit cards), you’ll have the cash available to pay for it.

Secondly, review all financing options! Determine which is best for your situation. That might mean a combination of loans, scholarships, IRA withdrawals (penalty doesn’t apply for higher education expenses up to a particular amount), Roth IRA withdrawals (contributions can be withdrawn tax-free), a 529 college savings account that you preemptively have saved in knowing you’d be going back to school, or cash savings. The key is to PREPARE and exhaust all your options in order to maximize your financial decisions in regards to financing the master’s degree.

How do I calculate the ROI of an advanced degree?

There are many ways to think about the benefits of doing an advanced degree, but one is looking simply at the cost of the program versus the expected increase in income you might expect after you have the degree.  

Here are some additional resources on thinking about and calculating the ROI of an advanced degree:

https://www.earnest.com/blog/what-is-the-roi-of-a-graduate-degree/

https://blogs.haas.berkeley.edu/the-berkeley-mba/calculating-the-roi-of-an-mba

Should I choose the cheapest program, or are there other things I should think about?

It depends on what your goals and reasons for getting the degree, and what you’d like to do afterward. For example, if you’d like to launch a job search for a new role at a new company after getting your degree, it’d make sense to attend a program that has good job search support, and a strong network of employers and fellow students or alumni in the location where you want to live and work. However, if you are aiming for a promotion or change in your current role at your current company, and know you need an advanced degree to help open up those opportunities, choosing a less expensive online-only or convenient evening program while you continue to work, etc, might be the best way to go.  

Why should I pursue a Master’s Degree?

A Master’s degree can do a few things for you and your career. First, it can give you credentials that will help you move forward into management or “expert” status within your organization that may open up career advancement opportunities and increase earning potential.

Second, it can facilitate a career change, if you’re looking to pivot your career in a different direction.

Third, it can help your job search by connecting you to a new network of people and employers you might not have been previously been exposed to.

Fourth, it can help you gain deeper knowledge in an area that will be useful to your career and ability to make an impact in your profession.

A master’s degree is NOT a good way to simply upskill in an area. If you’re looking to gain more skills, such as in project management or AI or data science, you may be better off with a skills-based certificate program, online course or program, or boot camp, than a full master’s degree.

What’s a good time in my career to do an advanced degree?

If you’ve worked for a few years after completing an undergrad, learned a bit about what you’re good at, what kind of work you like and want to do more of, and built experience doing relevant work, it might be a good time to pursue a Master’s degree.

I don’t recommend doing a master’s if you’re 1 year or less out of your undergrad program, or if you’re not exactly sure what the masters will do for you and your career. It’s a very expensive and time-consuming undertaking to be exploratory, so it’s much better to explore first, before committing to a full program.

Should I do an MBA, a subject-matter degree like data science or statistics, or a PhD?

For professionals in tech who want to stay in tech, these are the three common types of degrees that may be helpful in advancing your career.

An MBA or management or business-based masters’ program will be beneficial if you aspire to work in management. You could choose a general MBA or an industry-based version, such as one that specializes in technology management or healthcare management, etc. If you don’t have an interest in management, I don’t necessarily recommend an MBA, it’s typically the most expensive type of degree and usually doesn’t have a lot of subject-matter value to tech skills.

On the other hand, if you’d like to be an entrepreneur and run your own company, an MBA may be useful. However, ensure you choose a program that specializes in producing founders or entrepreneurs and not just general business management. (One frequent criticism of MBA programs is they’re not very relevant to small or early-stage companies).

A subject matter degree such as a master’s in Data Science, Analytics, Economics, or Statistics may be useful if you want to work on deeper projects in your field. Or have subject matter expert status on technology projects and programs, but don’t necessarily aspire to the management of organizations or people.

It’s certainly possible to move into management after an advanced subject-based degree, but these programs won’t have the business insights associated with management positions. Instead, these degrees are great for deepening subject matter expertise in a technology-related discipline.

A PhD would provide very similar career benefits to the subject-matter expertise Masters, with a few other possible benefits. PhDs will enable and encourage research and publication, which can further advance your professional profile as a subject-matter expert. You could also teach courses in addition to your work, which can be a rewarding way to enhance your career, give back to your field, and fill out your professional profile. If you absolutely love the idea of a deep dive into a particular area of technology, or if the benefits of research, publication or teaching appeal to you, a Ph.D. could be an excellent alternative to a subject-matter masters program. As an additional benefit,  PhD programs are often fully funded, therefore circumventing the need for any costly loans.

Are there other options that I should think about besides a Master’s Degree?

A skill-based education program, certificate program, or boot camp, would be useful if you want to get a specific certification (such as project management or a security certification), and is often less expensive than a full master’s degree. Think of these programs as the way to gain essential or specific skills for your job. Whereas the master’s programs focus on deepening your knowledge base in a particular area, with the option to practice some skill-building on top. Skill-focused education programs or boot camps can range in cost from a few hundred dollars to several thousand. Before you choose one, consider your career goals and find the program that aligns most with what you’re hoping to achieve!

If you have additional questions related to financing a master’s degree, what type of program to choose, or help in articulating your career goals, please don’t hesitate to contact me at careerjanet.com!