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Pursuing an advanced degree creates significant potential for higher earnings, but the long-term salary gains do not always add up enough to justify the costs.

Assessing the Financial Pros and Cons of an Advanced Degree

July 19, 2019
By Comerica Bank

Getting an advanced degree presents a rare mix of incredible potential and extreme risk. On one side, you could end up getting the degree and obtaining a high-paying job that makes student debt easy to deal with and sets you up for long-term earnings. On the other, you could be left with huge costs, more debt than you can handle and poor job prospects. Sometimes an advanced degree does not lead to significantly higher salaries. In other cases, the specialization that comes with a master's degree or PhD means you have fewer job options at your disposal, and you end up unable to work in your field or forced to relocate to a more expensive region.

The potential risk is not necessarily a reason to avoid pursuing an advanced degree, but it is a reason to be more careful about researching the degrees you are considering. You may also want to open a checking account online so you get full digital visibility into your income and expenses at any time, from any location. Complete financial visibility can make it easier to project what you can really afford when it comes to seeking an advanced degree.

The ROI potential of advanced degrees

The Georgetown University McCourt School of Public Policy, Center on Education and the Workforce®, regularly analyzes higher education trends and how they impact society. One of its studies, the "Five Rules of the College and Career Game," found that median earnings increase relative to level of education. The median annual salary of professionals with bachelor's degrees was $62,000 in 2018. That median annual salary figure jumped to $80,000 for those with graduate degrees. However, the study also found that the specific major or area of study pursued can be highly influential on salary potential. There are plenty of instances in which bachelor's degrees can lead to earnings that outpace the median salary of those with advanced degrees.

Advanced degrees can drive a serious return on investment, but the extent to which the degree is valuable depends heavily on the specific career outcomes you can expect from your degree. In simplest terms, the financial upside of an advanced degree comes in the form of higher lifetime earnings. But the downside that counters this benefit is high levels of debt and potential challenges in initial earning potential.

Optimizing financial management to minimize risk

Calculating the actual return on investment you can expect from an advanced degree requires a careful analysis of your current financial situation, job prospects in the sector where you want to work and the cost of the programs you are considering.

To do that, you need easy, daily access to your bank accounts. You do not want to be waiting for paper bank statements that get mailed to you each week. You likely do not want to be tracking your spending manually in a check register. Instead, online banking tools can give you immediate, constant access to your accounts. Web and mobile banking solutions let you understand your spending through complete and easy visibility into what you spend and how. You can use this visibility to calculate your living costs, assess how much debt you can afford, and project how much new income after pursuing a degree can help you evaluate ROI potential.

Comerica Bank blends our longstanding tradition of highly relational financial services with modern, digital banking opportunities. We can give you the tools you need to manage your accounts and provide banking products that help you gain a stronger understanding of your financial situation. From there, you can be better positioned to keep up with everyday costs and save for major expenses like pursuing an advanced degree.

This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice.

This article is provided for informational purposes only. While the information contained within has been compiled from source[s] which are believed to be reliable and accurate, Comerica Bank does not guarantee its accuracy. Consequently, it should not be considered a comprehensive statement on any matter nor be relied upon as such.