Does Earning a Graduate Degree Make Financial Sense for You?
BY JEFFREY KNOX
Today, more people than ever are earning college degrees. While few dispute the perceived social and economic benefits that come from higher education, the decision of whether to enter the workforce imme- diately or attend graduate school is a complex, life-changing decision.
Each year, approximately 35–45% of new chemistry graduates start a Ph.D. program the following year, according to a
recent ACS New Graduates Survey. The rationale for attending graduate school should be based on one’s career and life
goals, rather than just a desire to stay in school or a sense of
obligation. It’s important to weigh the potential cost and earnings associated with the decision before committing time and
energy to pursue another degree.
Think of graduate school as an investment, and analyze its
potential return (i.e., the return on investment, or ROI). Basically,
if the payoff in the future isn’t worth the price you pay, why
invest? Such an analysis requires a few assumptions and generalizations, and a critical look at anecdotal evidence as well as
statistics. For example, just as normal curves have outliers, there
will always be cases where college dropouts become CEOs or
well-published professors with Ph.D.s are barely making enough
to support their families.
The U.S. Bureau of Labor Statistics (BLS) publishes an annual
Current Population Survey that quan-tifies the financial benefits of earning a more advanced degree. A broad
sampling of the U.S. population
reveals that, in general, a higher level
of educational attainment yields significantly greater future earnings and
a lower likelihood of unemployment.
Level of education, employment sector, and length of experience are the
three most influential correlates of
salary. Educational payoff also tends
to be greatest at the highest degree
levels. In 2012, for example, those
with professional degrees registered
median weekly earnings of $1,735
and an unemployment rate of
2.1%. Among those with bachelor’s
degrees, the numbers were $1,066
and 4.5%, respectively, and among all
workers, the corresponding averages
were $815 and 6.8%.
In its “Education Pays” report, the College Board publishes a
comparison of earnings ratios. Compared with a high school graduate, the median earnings for a person with a bachelor’s degree
are 1.66 times greater. Obtaining a professional degree results in
an income that is 1.65 times that of a college graduate. From a
strictly financial standpoint, getting a graduate degree pays off
down the road. But as I’ll explain a little later, your calculation may
be a bit more complicated than that.
From an employment perspective, a graduate degree in chemistry also proves worthwhile. According to a 2013 study entitled
“Hard Times” by Anthony Carnevale, director of the Georgetown
University Center on Education and the Workforce, those with B.S.
chemistry degrees registered the fourth-lowest unemployment
rate among all college majors, at 5.8% for recent graduates. The
study also disclosed unemployment rates of 5.6% and 2.4% for
experienced graduates and graduate degree holders in chemistry,
In the most recent ACS survey of new graduates in chemistry
and related fields, published in the April 22, 2013, edition of C&EN
and reprinted on pages 8-10, the median starting salary in 2012
for new graduates in chemistry was $40,000 for a bachelor’s
degree holders and $80,000 for those with a Ph.D. For all chemists,
Earnings and unemployment rates by educational attainment
Unemployment rate in 2012 (%) Median weekly earnings in 2012 ($)
Less than a
high school diploma
SOURCE: Education Pays 2010: The Benefits of Higher Education for Individuals and Society, by Sandy Baum, Jennifer Ma, and
Kathleen Payea, College Board Advocacy & Policy Center. http://trends.collegeboard.org/sites/default/files/education-
pays-2010-full-report.pdf, p. 12.