Is Grad School Worth It? This ROI Formula Can Help You Decide
Every year, Gurufi helps applicants write powerful personal statements that earn them admission to top Master’s and Ph.D. programs in STEM, Humanities, and Social Sciences. As part of our commitment to providing free and affordable resources, we also offer insights into other aspects of applying to graduate programs.
In a recent discussion I had with Andrea Flores from IE University in Madrid, we talked about the Return on Investment of an MBA. It was a fantastic discussion that allowed us to explore ROI as a broad concept, but I did receive some messages from listeners asking me for a “sample formula” for calculating ROI. So, I decided to oblige. Importantly, this calculation doesn’t JUST apply to prospective MBA students. It’s also germane to other graduate and professional degrees.
That said, before I lay this out, I want to stress that there are a range of intangibles that every applicant must take into account, and thus this formula should be just one factor of many. For instance, what value do you place on moving into a career that you find more fulfilling or meaningful, even if the boost in salary isn’t necessarily a positive ROI? On the other hand, using this approach will at least allow you to see what choosing a particular field (or, to put a point on it, choosing happiness) will cost you monetarily.
So, for those applicants who don’t know, ROI is a statistic used in finance to gauge how profitable an investment is. Calculating the ROI in the context of graduate school can assist prospective students in determining if getting a Master’s or PhD is a wise financial move.
Here are the variables you must take the following into account when calculating the return on investment for grad school:
After taking these things into account, do the following:
It's crucial to keep in mind that the ROI for grad school might change based on the student and the exact school they select. After earning a graduate degree, some students could have a greater wage boost while others would not. The price of a program might also change based on the school and the particular program. Therefore, while calculating ROI, it's crucial for prospective students to carefully analyze these elements and perform their own computations.
Again, I think that this is very useful data in terms of figuring out whether it makes financial sense, BUT as our podcast conversation makes clear, you’re not a “homo economicus” that makes decisions purely on salary and financial outcome. Use this data point as one of many to determine whether grad school is for you!
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