The recent flurry of graduation ceremonies and commencement speeches may have you fondly reminiscing about your college days. You might even be considering going back for a graduate degree, maybe an MBA.
But is an advanced degree worth it? Personal finance coach Ramit Sethi says it depends on your personal career goals, and it's not a decision to be taken lightly.
"Going back to school just because you're not sure what to do with your career is probably a mistake," Sethi says.
Instead, you need to dig into how that additional degree will affect your long-term career goals and financial success. Here's how Sethi, author of the bestselling book "I Will Teach You to be Rich," says to approach this question.
If you're debating whether to go back to school to get an advanced degree, the first thing you want to do is make a comprehensive list of pros and cons. "Lay out all the reasons that you might go and you might not go," Sethi says.
Factor in the opportunity cost, Sethi says. "Not only are you going to be paying for this program, you're also going to be losing money by not being employed," he says. Depending on the school and the curriculum, that may be a significant investment. Researchers at the Urban Institute found the average student pursuing a graduate degree borrowed $18,201 for the 2015-2016 school year, the most recent data on file. If you're pursuing a two-year degree, you'll need to double that, and add in living expenses.
However, a graduate degree will teach you new skills, which may result in a higher income. A comprehensive study done by Georgetown University in 2015 found that the average American with a bachelor's degree earned $61,000, while those with a graduate degree earned $78,000.
A more recent analysis by the Bureau of Labor Statistics found that U.S. workers with at least a bachelor's degree earn a median of $932 weekly. Those with a master's degree earn a median of $1,434. The BLS also found that those with higher levels of education face lower unemployment rates.
Yet the research shows that your future salary varies dramatically based what you study. Sethi writes that it's not worth seeking a graduate degree when the tuition and expenses cost more than a year's starting salary in the field. If you're planning to pay $100,000 for a master's in a low-paying industry like museum studies or art therapy, you may never recoup the cost of that education.
If your list is leaning heavy on the pros, it's time to check out the programs and schools that interest you. Sethi recommends actually getting in touch with schools and asking them about graduation rates and job placement among recent grads.
"Ask them what's the median salary increase that [their students] get. What are the typical jobs that they get?" Sethi says. Or, better yet, ask the school to introduce you to a couple recent graduates and ask them some questions about the program.
"You want to make sure that you are going to the right grad school," Sethi says. This is why it pays to interview students and get a feel for the program's success. If you get the impression that students may regret their choice, you may want to think twice before pursuing the same path.
The other piece of advice Sethi gives to those considering grad school, especially if they want an MBA: only consider attending the best programs.
"Only go if [you] get into a top five program — not top 5% — a top five program [in the country]," Sethi says. Yes, he's talking about Harvard, Stanford, Wharton and others. For many degrees, there's a dramatic difference between the universities at the very top and everything else. And future employers will pay attention.
But before you stress on the cost, consider that, perhaps counter-intuitively, the top schools are usually well-endowed, so they are in a better position to award financial aid, grants and scholarships than some public universities and small private colleges, Sethi writes.
"'Expensive' schools can give you the highest signaling value AND end up being less expensive in total," Sethi writes. It's not about the sticker price — it's about what you ultimately pay and how much money you borrow.
Keep in mind that grad school isn't just about the money, Sethi says. "I do want you to be informed — I want you to have written down the numbers and created a simple Excel model," he says. "But also remember that in grad school you meet amazing people, you build a network, you have life-changing experiences, so factor that in as well."
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.