There are many things to gain by pursuing a postgraduate degree: knowledge, wisdom, skills, contacts, and the pleasure of intellectual stimulation, to name just a few.
There are also many things that must be sacrificed – like time for work, family, and leisure activities.
With all these benefits and costs to consider, the ultimate value of a postgraduate degree is a very complex matter. But let’s be honest: money is a factor.
Cash, moolah, dosh, loot, scratch – whatever you want to call it, the amount of padding in your wallet will be very much influenced by a Masters or doctoral degree. Yet money is often not talked about honestly in universities. How much will a degree cost, and how much can it boost your future earning potential?
We’ll get to some hard numbers in a moment; but first, consider the variables at play. The table below shows some factors to consider when looking at the financial cost of doing a Masters or doctorate, and how your earnings might be impacted.
The costs of the degree itself (fees, course-related costs) are just one part of the equation; there’s also the major cost of not earning during your period of study. When you take foregone earnings into account, it can cost hundreds of thousands of dollars to get a postgraduate qualification. Sure, your earnings afterwards are likely to be higher. But does that make the degree financially worthwhile?
The earnings boost of a Masters or doctorate depends on your specific situation – the number of years you have left in your working life, the typical salaries in your profession, the type of degree you undertake, and so on. Fortunately, there is research to guide us. A 2009 New Zealand study found that, as of 3 years after the period of study, a Masters graduate earns a median of 16% more than a Bachelor’s graduate. Median PhD graduate earnings are a whopping 46% higher than those of a Bachelor’s graduate after 3 years (Scott, 2009).
But the difference in earnings for those with a higher degree is wildly variable depending on the field of study and profession of the individual. US data indicates that the ‘wage premium’ (the extra amount paid to those with a higher degree over those with a Bachelor’s) is highest in biology and life sciences fields. If you’re working in arts or communication, the premium is comparatively small.
Adapted from Carnevale, Strohl, & Melton (2011).
However, even if you’re in a field where the wage premium for postgraduate degree holders is on the smaller side, the increase in earnings can still amount to quite a chunk of change. Given that most people work for around forty years or more, even a modest annual boost can add up to a massive lifetime difference. Another US study found that the lifetime earnings increase for a Masters graduate was over US$400,000, compared to a Bachelor’s graduate. PhD graduates were found to earn around US$1,100,000 more than Bachelor’s graduates over their entire career (Julian, 2012).
So if the lifetime earnings value of a higher degree can top a million dollars, then the cost – even if it’s in the hundreds of thousands – might be a very good investment. Whether it will actually turn out that way is a bit of a gamble, but you can say the same of any investment.
Of course, money is just one factor. But if you’re in the midst of a research degree and you’re eating your hundredth bread-and-butter sandwich, it’s nice to know that there’s probably a bit more cheddar in your future.
Carnevale, A. P., Strohl, J., & Melton, M. (2011). Selected findings from what’s it worth: The economic value of college majors. Washington, DC: Georgetown University. Retrieved from https://cew.georgetown.edu/wp-content/uploads/2014/11/whatsitworth-select.pdf.
Julian, T. (2012). Work-life earnings by field of degree and occupation for people with a bachelor’s degree: 2011. (American Community Service Brief /11-04). Washington, DC: United States Census Bureau. Retrieved from https://www.census.gov/prod/2012pubs/acsbr11-04.pdf.
Scott, D. (2009). What do students earn after their tertiary education? Wellington: Statistics New Zealand and Ministry of Education.