to grad or not to grad

Grad students are having to, in some cases, commit 15% of their future 2.5 decades or earning to escape the debt burden. Check out this article on Bloomberg. The stories are indeed sorry tales but nonetheless they are bets taken by adults.

Supply side:

The usual argument that providers of expensive grad education tend to make is that possessing a grad education yields higher earning power over a period of time. Students must not buy into such arguments. You can't drive a car by seeing the rear-mirror.

An interesting turn to this topic could be that of regulation in graduate education. There is no discussion about regulations at the supply end of such programs as the govt allows high-cost programs to advertise. Indeed, similar to qualified investor regulations, the govt must have regulation in the grad education sector. Nonetheless, the counter-argument is that prospective students for graduate education are in a position to make their own decisions accurately.

Demand Side

The usual reasons for students to sign up for expensive Masters programs are:

• A hope that the students will have better future as against status quo
• Laziness to work their way through in the industry and resultant escapism
  
• Genuine career switch needs (Finance professionals wanting to go to sectors such as Tech or Education as those have better job prospects than Finance).
  
• Genuine thirst for knowledge and/or upgrade of skills (this population knows what they are paying for and are usually not prone to be victims)
  
• Potential to enter a Ph.D. program after the Masters. This must be usually done if there is a intense need for intellectual stimulation.
  

Prospective grad students must be cautious to:

• conduct due-diligence w.r.t. placement statistics without undue influence by family or friends
• avoid succumbing to laziness - it will be an expensive escape :)
  

What's the solution?

1. Treat it as a business endeavor: Most of the Masters programs have a very extensive business plan by the schools. These programs are treated as cash-cows or in some cases, are rainmakers for the educational institutes. So should you! Create a thorough business plan complete with range of ROI, scenario-based risk management plan, and alternate paths in case things are not working out. See if you have support system in place for worst case scenarios.
   
2. Gain experience prior to enrolling for Graduate program. This makes the candidate more employable than without experience and allows the big jump in compensation post-grad. However, this goes out for a toss if you have a substantial gain in doing a fast-track combo (undergrad and grad in 5 years instead of just undergrad in 4 years).
   
3. If the prospective candidates decide to go for full-time, try finding fast-track options, unless you are a career-switcher. However, evidence suggests your odds are stacked in your favor if you are a part-time grad student.
   
4. Search for part-time options for the grad program
   

• This helps you keep your experience clock ticking
• This helps to keep the cash-flow
• This also allows you to pace up your studies.
  
• Allows tighter stop losses. For instance, if you are vouching for that MBA in Finance and figured that Dick Bove is saying there will be 150k-200k jobloss at banks, you can either suspend or completely drop out without significant loss