The costs and benefits of grad school

By Felix Salmon
January 7, 2010
great believer in the benefits of an undergraduate education when it's done right (which is rarely). But grad school is a different matter entirely: the opportunity costs are much higher, the amount of debt involved rises substantially, and the range of jobs you can do at the end of it in many ways goes down rather than up.

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I’m a great believer in the benefits of an undergraduate education when it’s done right (which is rarely). But grad school is a different matter entirely: the opportunity costs are much higher, the amount of debt involved rises substantially, and the range of jobs you can do at the end of it in many ways goes down rather than up.

Thomas Benton has a great column about grad school in the humanities: no one should do it, he says, unless they’re independently wealthy or otherwise being paid for somehow.

But what about more vocational graduate degrees, like law school? Anybody thinking about it should read not only Elie Mystal’s post at Above the Law but also the long comment stream attached, filled with people like Elie who graduated from law school with six-figure debts and found themselves either stuck in Biglaw jobs they hated, or else just simply overwhelmed by impossible finances.

It’s also worth noting the bimodal distribution of law-graduate salaries:


In order to make law school work (assuming you’re not paying cash for your tuition and living expenses), you basically need to end up in that second hump, over to the right: Biglaw, as it’s known. But a glance at the chart shows that most law students won’t make it there.

Here’s Benton, talking about humanities students, but with a lot of applicability to other fields too:

The letters I receive from prospective Ph.D.’s are often quite angry and incoherent; they’ve been praised their whole lives, and no one has ever told them that they may not become what they want to be, that higher education is a business that does not necessarily have their best interests at heart. Sometimes they accuse me of being threatened by their obvious talent. I assume they go on to find someone who will tell them what they want to hear.

Right now, a lot of people are thinking of going back to school, just because unemployment is high and well-paying jobs are hard to find. But anybody doing that should be very careful indeed about the debts they’re racking up. They could end up hurting much more than any degree will help.

(HT: O’Dell)

Update: Just found this astonishing chart, from Mike Mandel. It speaks for itself, I think:



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Attending law school is a terrible decision for a majority of current applicants.

We expand upon this in our post, “Applying to Law School? Please Reconsider!”: ns-bubble/

Thanks for the great work, Felix!

Posted by Lawyerist | Report as abusive

Great post Felix –

A similar situation faces accounting undergrads. Many states impose a 150 credit hour requirement in order to sit for the CPA Examination. This tempts many to go to graduate school to meet the credit hour requirement thus, saddling them with extra debt (not like law school but still plenty).

Post and discussion here: graduates-getting-sque.php

Posted by CJN | Report as abusive

This post is right up my alley.

When I graduated with my MA in philosophy in 2000, I was basically unemployable at any job that would pay me enough that I’d have to pay taxes.

Fortunately I graduated without debt, meaning that in the few years after I received my MA, I could afford to work as a cook at Ruby Tuesday, a night shift hotel desk clerk, a sandwich maker [at Quizno's and Panera Bread!], a community college adjunct and a night shift packer at a pudding factory. I never made more than $12,000 in those years I was kickin’ around.

In 2005–aspiring towards a job with vacation days, a wage denominated by the year and not the hour & health benefits–I went to law school. $132,000 & eight months of unemployment later…I did finally get the health benefits along with a middle class salary as an administrator for the US federal government. Unfortunately, at the cost of a great deal of financial stress.

In retrospect, law school offered some obvious pluses: 1) It pushed me towards the city, where my debt burden is somewhat lessened by a high cost of living / high wage environment; 2) I enjoy my job & probably wouldn’t have gotten it without my law degree; 3) My degree will provide me with more advancement opportunities in the government; and 4) The cost of law school may wind up highly susidized because, as a federal employee, if I make 10 years of Income Based loan repayments (15% of disposable income), the balance will be forgiven.

I view myself as one of the lucky ones. Even still, odds are good that I would have been better off working my way up from a lower pay grade at a younger age. (Though law school provided the financial means for me to move from a farm town to Chicago, where opportunities actually exist.) I turned 30 without ever contributing to a tax deferred investment plan. I lived a long time without insurance. And I have that aforementioned debt.

Posted by Some-Guy | Report as abusive

I agree with some of this article, however, I do not think that grad school should be completely ruled out. I think that some of us who may have started off in the humanities in our undergrads can benefit from a strategic degree that will allow us to get a job in the field that we want, and making enough to pay off what we owe in loans.

My undergraduate degree is in Political Science, and I chose to go onto grad school right after college. In determining the direction, and degree path, I chose not to pursue a MA in Political Science, rather I went on for a Masters of Public Affairs. My masters provided me with really beneficial skill sets that were crucial for me getting not only my first job right out of school, but also in attaining my current position. I have taken some other masters level classes at other universities since I have graduated and started in the work force and feel fortunate that I chose the program that I did, because I feel as though the others that I have witnessed made a lot of promises, but failed in really challenging students, and providing opportunities, and directions for their future careers.

I currently work for the federal government, and was able to more than double my salary in the last 3 years because of my masters level training, not only did I gain very marketable skills, I also had achieved some credibility when going for a high paying government job during a recession, and at the age of 26. Not trying to “toot my own horn” but I have a much better understanding of how to analyze, and process situations than others my age, or even older because my school really prepared me to be an effective employee.

I do not think that grad school is the right option for everyone, and I do agree that some degree options really are not going to help you get a job, but if you are strategic, work really hard, and take as many internships as you can, it can really pay off. Also, I understand that financial numbers are often the easiest way to make an assumption of whether or not a decision is worth it, though there is something to be said if you can get a job in the field that you are passionate about. I know a lot of people who have a very high salary, but hate going to work.

Even if I was not making my salary, I can not imagine being in a different field, and in a different job at the moment, and I really do think that the financial burden of student loans, sleepless nights, and taking some really poor paying internships was worth it. Yes, I wish I didn’t have that large loan payment a month, but it will get paid off soon enough. I am glad that I made an investment in myself, and my career. It is not right for everyone, but it was definitely the right choice for me.

Posted by justathought | Report as abusive

It’s a extremely small sample space, but it may be indicative of an actual trend – Are most of the openings in the Public Sector?

Both of Lawyer commenter’s above are Federal employees. It seems like a poor industry to enter, to me, if a large portion of the job growth (openings) are in Government positions.

Then again, I could probably say the same thing about economists…

Posted by joenorton | Report as abusive

Excellent article. I chose to get a Master’s of Healthcare Administration (instead a JD) because I discovered it was actually the degree I needed for the type of work I wanted to do. When I started, I didn’t even know how to perform an actual cost benefit analysis or how to calculate the net present value of my investment in an MHA. I got very lucky in the sense that the math worked out and this has a positive return; however, I’m ashamed to say that I arrived here using the conventional wisdom that more education is always better (rather than actually looking at the data). While I consider myself fortunate to have a job lined up after I graduate in May, I strongly urge all of my peers to really do their homework before choosing to pursue any type of graduate degree.

Posted by schris | Report as abusive

I graduated from Washington U in St. Louis Law School in 1995 with 75,000 in debt ( some it at 13.5% interest). The most I ever made as an attorney was 45K and I was paying 780 per month on my loans. I finished in the bottom quarter of my class ( nowhere near that 2nd hump). I should add that I was probably clinically depressed during 2 of my 3 years in law school due to stress and frustration.

I will say however, that in my current position (software developer) the law degree sets me apart from others in the field. Also, my salary in this field has been much more lucrative.

Posted by randfockens | Report as abusive

Not to nitpick, but that chart at the bottom shows the change in salaries of the different groups over the last 10 years, not the effect of the degrees on your salary as you seem to imply by including it in your post. So while Bachelor’s degrees may have caught up to higher degrees by 5-10% in the last 10 years, in fact they still make considerable less.

But your confusion is understandable. I only know about statistics because I went to a professional graduate school.

Posted by pnj | Report as abusive

“noting the bi-modal distribution of law school-graduate salaries”

bi-modal or bi-polar …

Posted by tippygolden | Report as abusive

Here’s an article on another piece of research, which is related and interesting. It talks about the ROI associated with the MBA, and whether it pays to have work experience. tent/dec2009/bs20091210_900211.htm

Posted by NYCType | Report as abusive

While this article seems reasonable, I believe it neglects a factor that motivates a large portion of people considering post-baccalaureate degrees: the desire to study whatever it is they’re pursuing a degree in. For almost anyone outside of law, medicine, and business, graduate degrees are, or can be, funded up to full tuition and a stipend. In addition, it is simply not possible to work at the frontier of fields such as mathematics, physical or social science, computer science, etc, without a graduate degree. And given the fact that many of these degrees are paid for, it seems hardly justified to say that such a learning experience is not worth it.

Posted by BenN | Report as abusive

A recent post at Cool Infographics shows a correlation between higher levels of education and both higher salary levels and lower rates of unemployment: 9/12/28/higher-education-lower-unemploym ent.html

Posted by gumption | Report as abusive

Good piece. It’d be instructive, though, to look at the difference between science and engineering Ph.D.’s, vs. humanities and social science ones. Of course scientists and engineers typically have more earning power than philosophers and sociologists (if less than lawyers and MDs). Probably more importantly, though, science and engineering Ph.D. students, at least a major research universities, pay no tuition and often get a modest stipend to live on*, which of course means much less or no debt (beyond what they racked up as undergrads!). It’s a completely different ballgame economically, and one that obviously works a lot better for the students.


* For the uninitiated, the reason for this is that graduate students in science and engineering don’t take many classes, and instead spend almost all their time working in the labs of professors who need the (relatively cheap!) grad student labor to run all of the complicated experiments they need to qualify for and execute on lucrative government and industry research grants.

Posted by MH2010 | Report as abusive

I think the article raises some pertinent points about the high costs associated with grad school, but I do believe that it is too premature to consign graduate degrees to the garbage bin. Agreed that career choices narrow down after a graduate degree, but you’re also perceived as an expert in your chosen field once you earn a master’s or a higher degree. And there are professions such as research that require candidates to have a graduate degree. Those who love academics and want to upgrade their skills stand to gain a lot from <graduate degree programs. Just like what I did when I took graduate degree programs ( ree-programs.php ).

Posted by Paul_T | Report as abusive

I am currently considering attending grad school. I have a bachelors degree, I was working for a large company but left in order to open my own business. Unfortunately due to issues with our investors 2 years after I opened the business I had to close it down. Now I am back trying to look for work but I have been unable to find any management, assistant manager or even admin positions. The feedback I keep getting back is that I don’t have enough experience. I am about to be 29 and having my own business thought me a lot, but I am very worried that my current employment options are entry level call center type of job. I am looking for advice on if I should get an MBA, enroll in law school or just go into the call center and see if I can grow from there.
Any advice would be appreciated Thanks

Posted by mwinters | Report as abusive