What Should you Study in School / Should you Go back for More Education?

The simplest answer is calculate your return on investment.

Education is an investment in yourself

It’s “good” debt right? So treat it as such.

Note: I don’t believe any debt is good debt any longer, including buying a home, car or even higher education.

Student loans can sometimes be necessary debts, but not good debts.  I hate that I thought it was good debt and I didn’t watch my spending as a result, thinking: Hey this is how everyone does it.

Simply put, if you can make more money than when you first started and if you can pay back your student loans (if any) within 5 years or so, then go for it.

Return on Investment (ROI) calculation:

  • You earn $40,000 now.
  • You need a graduate degree to rise in the ranks.
  • It’ll cost $40,000 for a graduate degree and take you 4 years.
  • Cost of living during those 4 years was $20,000 a year or $80,000 in total
  • You will make $75,000 as a starting salary after you get your degree.

Total cost of your degree: $120,000

$75,000 (new salary) — $40,000 (old salary) = $35,000 extra made per year

$120,000 (cost of degree) / $35,000 of extra income per year = 3.34 years.


Glad you asked.

To be even more conservative/crazy, you can also include lost income for those 4 years which is $40,000 x 4 years = $160,000, especially if you aren’t earning any income (some graduates do), and/or working a full or part-time job.

$120,000 (tuition & cost of living) + $160,000 (lost income for 4 years) = $280,000 cost

New total cost of your degree with lost income: $280,000

$75,000 (new salary) — $40,000 (old salary) = $35,000 extra made per year

$280,000 (cost of degree) / $35,000 of extra income per year = 8 years.

No single calculation will work for everyone

Everyone’s situation is different.

Maybe my calculated tuition is too high, or cost of living is too low. Just learn how to calculate your ROI, and if you can pay off your student loans in about 5 years and make more money, then go for it.

Just be sure you know what you’re getting into.

About the Author

Just a girl trying to find a balance between being a Shopaholic and a Saver. I cleared $60,000 in 18 months earning $65,000 gross/year. Now I am self-employed, and you can read more about my story here, or visit my other blog: The Everyday Minimalist.