With the cost of education on the rise, every college student has to make some important financial decisions. Not only do you want to seek out scholarships to ease the financial burden, but you also need to decide how much debt you can handle for tuition and student living. Some students take a slower path to work their way through school. Some rush ahead to a high-paying job at the end that will ultimately make debt repayment faster.
And these financial decisions are doubly important when it comes to graduate school. If you’ve recently graduated or will graduate soon, no doubt you’re weighing the pros and cons of pursuing post-graduate education. The knowledge would be valuable and the experience would be great, but the real question is whether you can afford to invest more, or go into deeper debt, in order to continue your studies. Today, we’re here to help you make that decision by covering each of your options and the factors that might influence your decision.
Key Considerations for Investing in Post-Graduate Education
- When thinking about investing and taking out loans for a Masters degree, there are some key considerations.
- Your current debt
- Your ability to repay debt now
- Your ability to repay debt after earning a master’s degree
- Potential scholarships or tuition benefits
- Whether you’re better off waiting a few years
- The best course of action for your life and finances
How Much Debt Are You Starting With?
Any time you are deciding to take on new debt, the first question will always be how much debt you’re starting with. And this isn’t just for your personal finances. Banks and even the federal government may not be willing to loan to you if you already have an unmanageable amount of debt. The most important issue is whether or not you can handle stacking any more debt onto what you already have.
College students today bear a historically high economic burden. It’s not unusual for undergrad studies alone to put graduates in a precarious financial position. Even if you have a deferment period, that debt is very real and you will need to start paying it off soon. If you can’t handle additional debt, then you may need to put off graduate studies for a few years.
Of course, educational debt isn’t the only kind of debt you may be looking at. If you have purchased a car that still has an active loan, have unfortunate lurking medical debt, or even took out a mortgage recently, this will contribute to your debt consideration. The more debt you have, the more carefully you should consider graduate studies.
However, if your debt is manageable or within the realms of payable considering your eventual professional income, then investing in graduate studies may well be the right move.
Can You Take On Any More Debt?
The next consideration is whether or not you are able to take out more debt to pay for graduate studies. As we mentioned earlier, lenders are very careful about who they lend to. Not only do they want to make sure that each borrower can pay the loan back, but they also don’t want to help anyone get into a difficult spot.
If you already have a massive amount of debt or an unmanageable debt-to-income ratio, then banks and credit unions are far less likely to be interested in lending to you. You might not be able to get additional loans. Pure student debt can get you into this position, but it is far more common for students who also have other forms of debt like credit card debt, car loans, mortgages, or medical debt.
The state of your credit score may also matter considerably in whether you can achieve a loan for your post-graduate education. If your credit has taken a hit for non-deferred education debt or other reasons, you’ll have a harder time getting a loan for more school. That said, there are also many methods to improve your credit and even consolidate your student loans and other debt to reduce your debt-to-income ratio and make new loans possible.
Will Your Graduate Degree Help to Repay the Debt Faster?
If you determine that you can move forward financially, the next deciding factor is your earning ability. In fact, this is the most important factor when it comes to planning your future. Not only should you consider how much your degree will cost, but also how it can help you. Will your graduate degree help you repay debt faster? And if so, how much faster?
Start by assessing your potential income in the jobs you can get with your undergraduate degree. This will determine your baseline debt repayment ability. With these jobs, you will be able to repay the debt you already have at a certain pace. And for many, the most efficient financial choice will be to stop and work a few years and begin repaying undergrad debt before moving on to post-graduate education. This is particularly true if the positions earned by post-graduate degrees don’t necessarily pay much more than you could earn now.
However, in some careers, your income potential skyrockets with a post-graduate degree. Engineers, nurses, and therapists are all great examples of careers that make more with a Masters degree. If this is true for your industry of choice, there’s a chance that you could repay your entire debt, including new post-grad debt, faster overall with a post-grad degree job than you could with undergrad-degree positions. In this case, the investment is worthwhile. In fact, the smartest way out of debt might be to first go in deeper for further education.
What Are Your Scholarship Options?
Of course, just because you can benefit from investing in post-graduate education doesn’t mean you should do so blindly. The best way to stay in control of your debt is to borrow as little as possible. Which means finding alternative ways to pay for college. Scholarships are your natural solution when looking for ways to reduce the total debt you add to your collection.
Really take the time to explore potential scholarships, apply for them, and keep up with the state of those applications. Yes, we know that dealing with a few dozen different scholarship organizations and actually using the money once you achieve it is challenging. But it’s also a great way to get your tuition, textbooks, and possibly even housing costs partially covered without going deeper into debt.
Use your school’s resources and counseling services to learn about your options. Those scholarships are available for a reason, even if you have to jump through a few hoops to get them.
Can You Get a Job With a Tuition Benefit?
There’s also a new way to help cover tuition that has only recently become popular: Tuition payment as an employment benefit. This is often called a “tuition benefit” or “tuition reimbursement”. As employers compete for talented and skilled employees, the unique and often flexible benefits they offer have been improving significantly. You may be able to find an employer who needs your skills and is willing to offer a tuition benefit as part of your employment perks. Many graduate students have also found that working on-campus can come with a tuition benefit or discount of some kind.
This would, naturally, require you to find a job before going back to school or to balance a post-graduate education with a full-time position. But it’s also a way that many of today’s students are making it possible to continue their education when otherwise it might be too great of a financial burden. And you can always ask if this is a possibility even if employers don’t offer it at first.
Tuition benefits from a job will usually not cover textbooks or project materials and it may not even cover the entire cost of tuition. But if you do find a job that offers even some tuition benefit, this can help you reduce the size of the loan you’ll need to complete your studies.
Would It Be Better to Wait a Few Years of Debt Repayment?
In many cases, your financial situation can change significantly in a few years. If you currently have too much debt to take out a loan, or if your debt is stacked too high right now to add any more, that doesn’t mean you have to give up on the idea of graduate school altogether. Instead, think about where you could be if you get a job and wait a few years.
With a few short years at a good paying job, you could drastically improve your credit score, burn down some of your debt, and be in a much better position to invest in graduate school. This is often the ideal decision for anyone who is currently blocked from continuing their education for financial reasons. But it also might be the best choice for you in order to simply get your finances in order before starting on the next phase of your education.
However, there is also a reasonable situation for taking a financial leap. It’s okay to add more debt if you know for certain that your job at the end of post-graduate studies will help you pay all the debt off more efficiently. Or if your finances are already in good shape and you can afford to dedicate a few more years and loans to your education. Waiting a few years can be a great choice, but you might not have to.
Determining if Graduate School is Worth the Investment
Finally, no matter what other factors are at play, the decision is ultimately up to you. Do your best to see the big picture, because this is the kind of decision that can shape your entire future career. What are the best decisions for your future, your finances, and your career as a skilled professional? Is your post-graduate education ultimately worth the investment?
No one can answer this question for you because it depends on too many personal factors. Your finances, your plan, and the degree you’re pursuing. Most likely, you will gain incredibly valuable knowledge and experiences from your post-graduate education. The only question is whether to dive straight in to quickly achieve the six-figure job that will pay off all your debts or to take it slow and work your way through graduate school as so many have before you.
No matter what you choose, LendKey may be able to provide the financial assistance you need. Whether you take on your graduate studies all at once, ease your way in, or work your way through, tuition is sky-high these days and you don’t have to go it alone. Let the LendKey team help you connect with local low-rate lenders who are eager to help young graduates achieve their dreams. If post-graduate studies are worth the investment, we’ll help you make that investment wisely. For more information, contact us or check out the website today!