04/19/2012 06:12 pm ET Updated Jun 19, 2012

Should I Go Back to Grad School?

By Debbie DiVito, Content Manager, Women & Co.

Based on data collected by the U.S. Census Bureau, if you're considering returning to school, it's with good reason: generally speaking, there is a positive correlation between education and salary levels. On average, the more education an American has, the more money he or she makes. But that's not always the case; just getting a degree won't guarantee a higher salary. As a result, going back to school could potentially present a serious hazard to your financial health. But how do you know if it's right for you?

If your experience is anything like mine, when you input the question, "Should I go back to grad school?" into Google, you'll most likely be presented with two opposing views: experts who say now is the worst time to seek higher education, and others who argue there's never been a better time. While there is some validity to both schools of thought, when it comes down to it, the decision to pursue further education lends itself quite nicely to the same thing we rely on to help us make other expensive decisions: simple math.

Is Grad School Right for You?
Sure, there are other questions you'll need to answer: Why do I want to pursue higher education? Does the next step I want to take in my career require further education, or am I just running from a job I don't like? But perhaps one of the most important drivers of your decision is the cost-benefit analysis. In other words, you'll need to ask yourself the question, "How much will my decision to attend grad school cost in the near future, and is it worth the potential payoff in the long term?" and then back it up with numbers.

Crunching the Numbers
Let's be honest... it comes down to math. Although the idea of going back to school for the sake of scholastic betterment is great in theory, education comes with a price, and you've got to determine its worth. To make a smart decision, you'll need to research the potential costs of grad school and weigh that amount against the potential salary benefits. To get started, you'll need the following information:

Your Current Salary and Near-Future Earning Potential:
• What is your current salary?
• On average, what annual raise do you expect in your current role?

Your Estimated Cost of Attending Graduate School:
• What is the total cost of the graduate school program you're considering? (Consider costs such as tuition, fees, books, supplies, housing, and other living expenses.)
• Will you have income (resulting from scholarships, grants, or employment, for example) while you're in school? If so, how much?
• What is the duration of the program you're considering?

Your Estimated Cost of Borrowing:
• How much will you need to borrow? At what interest rate?

Your Estimated Post-Graduate School Earning Potential:
• How much do you expect to earn in the first year following graduation? On average, what annual raise do you expect?
• How many years do you plan to work before you retire?

Making Your Decision
Spend some time researching and put serious thought into your answers to the above questions, paying close attention to numbers you estimate. Remember, you're basing a big decision on this calculation, so you'll want the math to be realistic.

Once you have a complete set of data, you'll need to compare your estimated cost of attending graduate school to your earnings potential. There are online tools that can help you. For example, Kiplinger's has some great resources to help you weigh your decision, including a calculator to help simplify the process of crunching the numbers in your own cost-benefit analysis.

About the Author:
As Women & Co.'s Content Manager, Debbie is responsible for creating original editorial content for Women & Co. In her role, Debbie couples more than seven years' experience supporting clients in the financial services industry with her passion for writing about important financial concepts in a way that is both unintimidating and fun. Debbie is a Certified Public Accountant, has undergraduate degrees in Finance, Multinational Business Operations, and Spanish from The Florida State University, and holds a Masters degree in Accounting from The University of Virginia.