Betting on Grad School

What's graduate school really worth?

A sluggish economy and hiring slowdown has led many twentysomethings to consider heading back to school. But amid rising tuition costs and a generation-wide accumulation of debt, is graduate school financially worth it?

The cost of graduate school has skyrocketed, rising 60% in the past decade according to the Council of Graduate Schools. A one-year master's degree in political management at George Washington University can cost $38,000. Harvard tells law-school students to plan for $62,000 a year for tuition, living and food costs.

A medical degree at Northwestern University? About $241,000, including $168,000 for tuition. The typical 2008 medical-school graduate will start her career about $150,000 in debt, says the Virginia-based American Medical Student Association, and will spend 20 to 30 years paying it off.

After graduating from Boston University in 2001, 28-year-old classmates Zach Dubey and Aaron Plitt took out loans and enrolled in separate law schools. Today they lead very different lives.

While Mr. Dubey works at a law firm in New York, Mr. Plitt left law school after three semesters and is now a broker in a steel-services company.

"I realized that staying in school just to finish was not worthwhile," says Mr. Plitt who now makes about 50% more than Mr. Dubey.

Grad school has to be "intentional and purposeful," says Peter Vogt, president of Career Planning Resources in Bloomington, Minn. Do not apply with thoughts of riding out the economy or figuring out a career path, he says, because "that is an expensive risk."

Before even looking into graduate schools, narrow in on specific jobs you want. Dig deeper than just a career in business, law or medicine. What industries in business or subsets of law or medicine interest you? Find out if those jobs require or prefer a professional degree by contacting professional organizations and people who work in those fields.

When evaluating a degree program, call the schools and research how many graduates actually land the jobs they wanted. Ask about their salary levels. These numbers may vary greatly by school and profession with bottom-tier schools commanding similar tuitions but smaller future earnings.

Before you borrow, consider how much school debt you will be able to afford. Lawyer Zach Dubey says he is happy at his firm, but he still lives with his parents because "I can't pay rent and afford to pay my loans off."

Using the Student Loan Advisor calculator on his Web site, FinAid.org, publisher Mark Kantrowitz says loan payments shouldn't take more than 10% to 15% of your income. Go to the Bureau of Labor Statistic's www.bls.gov and human resources data firm Salary.com to find earnings estimates and salaries by profession.