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Should I Go To Grad School?

When I finished undergrad, I knew I would be looking for a job instead of thinking about more school. There just wasn’t anything I was interested in enough to warrant 1-2 years or more focusing on one specific topic. In addition, even my 21-year-old pre-personal finance nerd self knew that I didn’t want to take out student loans [1] to finance a graduate degree…especially before I had earned even a dollar of “real” income.

As it turns out, not continuing with school was a better decision than I could have ever known. Graduating and looking for a job in 2007 instead of 2008 or 2009 meant that I was looking at a time when entry-level jobs were plentiful. I’ve been thankful for the fact that I knew what I would be doing well in advance of graduation – and for the first couple of years, I didn’t really regret deferring an advanced degree.

Fast forward four years and I have the learning bug. I miss the stimulation of professors, the joy of being in a room full of motivated people, the excitement and promise of a new semester. In the back of my head I did always think I would go back to school at some point. Years ago, a college degree was enough to set you apart from people your age. These days, undergraduate degrees are more plentiful than ever, and advanced degrees are almost required for some of the best jobs. Plus (if I’m being really honest)…I’m just a little bit jealous when Facebook brings news of yet another friend/colleague/former classmate who has made the choice to go back to school.

So…I’ve been thinking about going back to school.

Making the Money Work

While I’d like to think I do a pretty good job of saving and investing, even thinking about going back to school is a little overwhelming from a financial standpoint. If I go full-time, I’d most likely need to quit my job and lose nearly all of my income. If I go part-time, I’d still probably have to cut back hours and thus lose some of my income – plus I’d be prolonging the number of years of school spending.

Spending more while earning less. Well Heeled wrote recently about living on 50% of her usual income because of deciding to go back to school, and how it’s impacting her decisions on other life events, like her honeymoon. And that’s the problem with REALLY big life decisions – they often require you to spend more than usual at the precise time you’re earning less than usual. Going back to school is one example, but people find themselves in similar circumstances when they want to take time off to travel, or become a stay-at-home parent [2], or make a cross-country move [3] (unless you’re really lucky and get to keep your job [4], like me!).

Student loans. When it comes to paying for school, most people are nearly forced to take out student loans to cover the cost. Scholarships/grants for graduate programs are much less plentiful than those for either undergraduate or doctoral students. Some combination of lower salaries, higher expenses, lifestyle inflation [5] and ever-expanding savings goals means most people don’t have the cash to pay for both tuition and living expenses out of savings, especially if they’ve been working for only a few years. Those who have worked for more years may have a little more of a cushion – but may also have mortgages, children, and other things that I still consider  “grown-up expenses.” 

Tapping retirement accounts. One funding option [6] I do have is to tap into my retirement accounts.  Canada has a pretty neat system where you can borrow [7] from your retirement accounts for school, and pay yourself back over time – but unfortunately I’m not in Canada! I’ve been diligently saving in a Roth IRA since my first paycheck, and education is one of the things that allows you to take a tax-free Roth IRA withdrawal [8]. But of course using retirement savings now means it’s not available later…and it seems wrong to withdraw from my retirement funds during a time when I won’t be able to contribute to them.

Should I Go Back to School?

The bottom line is, going back to school will have a major impact on my finances, even if I go in-state, continue living at home [9] to save money, and do the very best I can to cut other expenses. So…what’s a girl to do? I’d love to go back to school, but don’t want to take on a huge debt load. I’m not sure I want to use my savings and sacrifice other goals like buying a house… plus my savings wouldn’t go very far if I did a full-time 2+ year program. And I generally think that raiding retirement accounts for anything other than retirement or a TRUE emergency is a pretty bad idea.

What would you do?

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