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Is Getting a Ph.D. Worth the Financial Cost of Graduate School?

According to ongoing data from the Bureau of Labor Statistics (BLS), more education typically equates to more income. That means those with a doctoral degree, commonly called a Ph.D., outearn those with a master’s degree on average, just as those with a master’s degree outearn those with only a bachelor’s and bachelor’s degree-holders outearn those with only a high school diploma.

But that doesn’t mean the return is worth the cost of graduate school for everyone. Statistics on average earnings don’t show the full picture.

Well-paying doctoral jobs can be hard to come by, and even if you can get one, the pay increase may not be enough to offset the cost. Plus, in some instances, the time spent out of the workforce is unnecessary and can be detrimental to your earning potential.

It’s necessary to weigh your future salary and career prospects against your potential debt and lost earnings to decide whether getting a doctorate is worth the cost.

When Getting a Ph.D. Degree Is Worth It

Pursuing research, gaining a deeper understanding of your field, exploring a passion, or even gaining the prestige of letters after your name and someone calling you “doctor” are all reasons people pursue doctoral degrees.

Fortunately, in many cases, a doctorate is not just good for the mind. Getting an advanced degree can also be good for your career and earning potential. But there are only certain circumstances in which a doctoral degree is worth it.

1. Your Job Requires It

If your job requires a doctoral degree, you can’t move forward on your career path without one.

Most colleges require doctoral degrees for professors. The exception is fields in which a master’s degree is the terminal degree, such as the fine arts.

For example, if you’re looking to teach creative writing, you need a Master of Fine Arts in creative writing. It’s referred to as the “terminal degree” in that field because there’s no such thing as a Ph.D. in creative writing. But many creative writing professors also have doctoral degrees in other fields, such as English literature, and having published work is a must.

Doctorates are also standard in all research sciences, whether you plan to work in academia, government, or the private sector.

For example, a doctorate is required for those who work in the pharmaceutical industry discovering new drugs; those who develop new aerospace technology, like ion thrusters for NASA’s space probes or parachutes for the Mars Rover; or those who study the effects of climate on the biosphere, like climatologists. A Ph.D. is especially required for specialized, high-demand fields, like biotechnology, information systems, and medical and environmental engineering.

There are other jobs where doctorates aren’t required but could be useful. For these areas, think more carefully about the potential payoff. Essentially, if it will increase your earning potential beyond the cost of the degree while allowing you to pursue work you love, it makes a Ph.D. worth it.

For example, a doctoral degree in a liberal arts discipline could give you a competitive edge in career fields from media and political advising to business, manufacturing, or health and social sciences.

Something else to consider: It’s a common myth, but you don’t need to have a master’s degree to enroll in most United States doctoral programs.

And a doctorate might actually be the cheaper way to go. Universities use master’s degrees as drivers of profit, according to Slate. But the same isn’t true of most doctoral programs, which are often funded with grants.

Thus, if your job requires a master’s degree, it’s worth investigating whether skipping the master’s and going for a Ph.D. is the more cost-effective way to pay for your graduate education while increasing your earning potential. Just know that a Ph.D. takes significantly longer to complete.

2. It Increases Your Earning Power and Odds of Advancement

More education typically leads to bigger paychecks. And that’s true of more than just professional degrees like medical and law degrees. According to 2020 BLS data, the average bachelor’s degree-holder earns $1,305 per week, while the average Ph.D.-holder earns $1,885 per week — a difference of 44.4%.

The difference is less dramatic between a master’s and a doctorate, with Ph.D.-holders earning only 22% more on average, according to the BLS data.

But again, statistics don’t always tell the whole story. That’s why it’s crucial to look at your own unique career trajectory.

For example, in biomedical science, PayScale shows doctorate-holders with an average salary of 44% more than master’s degree-holders. And in finance, the salary figures show a doctoral degree increases your earning potential by 62.5% over master’s degree-holders.

According to PayScale, the median income in 2021 for any Ph.D. employee with less than a year of experience — meaning their first job straight out of grad school — is nearly six figures, a difference of 30% over master’s degree-holders. The top-paying jobs go to those in the STEM fields (science, technology, engineering, and math). But a doctorate could outearn a master’s in any field.

Moreover, just as a doctoral degree is the entry ticket for many careers, it might be the necessary ingredient for getting a promotion in your field. And your promotion could be what brings the higher salary.

3. It Promises High Job-Placement Rates

More education leads to more income, but it also typically leads to higher employment rates.

According to the BLS data, doctorate-holders have the lowest rate of unemployment of all the education levels. As of 2020, the unemployment rate for Ph.D. degree-holders is 2.5% compared to 3.1% for master’s degree-holders and 4.1% for bachelor’s degree holders.

Many job-seekers fear their doctorate can make prospective employers think they’re overqualified. But according to Isaiah Hankel, founder of the career-placement service Cheeky Scientist, that’s a myth. In his experience, Hankel has found that doctorate-holders are typically more desirable and better paid.

And this finding isn’t limited to the sciences. Cheeky Scientist also notes that even in fields such as the humanities, doctorate-holders who know how to leverage their skill set are desirable to businesses, government organizations, and nonprofits.

That’s true even if your Ph.D. doesn’t directly translate to a specific career. For example, a doctoral program in pharmaceutical sciences trains you for a drug research or development career. But a Ph.D. in history could get you a job working in government, for a nonprofit, or even for a corporation.

Employers like hiring doctorate-holders because hard skills — the technical skills required to do a specific job — aren’t the only ones that are useful. Soft skills, the ones that make employees good candidates for any job, also matter.

In addition to demonstrating you have commitment and drive by virtue of completing a Ph.D., doctoral programs develop the top in-demand soft skills employers want, like writing skills, research skills, problem-solving, and critical thinking.

More specifically, completing a dissertation (a necessary component to getting a Ph.D.) and working with a dissertation committee requires mastering several top in-demand soft skills LinkedIn found necessary in 2021, like creativity, adaptability, collaboration, and persuasion.

As Victoria Blodgett, the former director of graduate career services at Yale University and current assistant dean of postdoctoral affairs at Dartmouth College, tells the Atlantic, “People who take their Ph.D.s into other realms are not necessarily being hired for their content expertise, but for their process skills: the ability to do excellent research, to write, to make cogent arguments.” And these skills are in high demand.

But be aware that with some degrees, it may take some creativity to translate your doctorate into an applicable career, and you may not get to work in your first-choice job. To get the best picture of what your career prospects might be like before investing time and money in a Ph.D., talk with other advanced degree-holders in your prospective field.

It also may be of some benefit to speak with the career-placement services at your prospective university. But unfortunately, most university Ph.D. departments focus on preparing their students for jobs in academia, which are very hard to come by.

They’re less well-versed in the landscape outside academia, which is wide open in comparison. For example, in 2017, the National Science Foundation found that the U.S. private sector employs more doctorate-holders than universities do, a figure that continues to rise.

Fortunately, universities are beginning to catch onto the need to better inform students about opportunities outside academia. So it’s worth it to choose a school based on its ability to help you transition into a career. Look for one that works with a Ph.D.-placement service like Versatile PhD or has a similar jobs program.

4. It’s Mostly or Fully Funded

It’s true that Ph.D.-holders earn on average nearly $1 million more than master’s degree-holders over their lifetimes. But that gap quickly disappears if student loan payments eat it up.

The extra years of education don’t come cheap. The total cost for a doctoral degree varies widely by university and program, and the total depends on how many years it takes to complete your research and write your dissertation.

On average, it can take anywhere from four to 8 years to complete a doctorate, costing anywhere from an average of $92,200 at a public university to upward of $294,200 at a private university like New York University, according to 2021 statistics from Education Data.

Institutional grants can reduce these costs. Education Data reports the average annual grant aid for a doctoral degree is $12,811. But that’s only about 50% of the potential cost, and not all students are awarded this amount.

Plus, that only covers tuition. It doesn’t include the costs of books, materials, fees, or living expenses, which can vary considerably, depending on where you live. It also doesn’t consider lost income if you’ll be taking time off work to attend school.

That’s why so many students must borrow student loans for graduate school. According to a 2020 report from The Center for American Progress, 40% of the current U.S. student loan debt belongs to graduate students, even though they represent only 25% of the borrowers.

Fortunately, it’s more common to find full funding for doctoral programs than any other degree, whether that money comes from fellowships, assistantships, or institutional grants.

Fellowships are like scholarships — merit-based aid you don’t have to pay back. But unlike scholarships, they’re typically awarded to Ph.D. students conducting research in a specific area. And they often cover the full cost of attendance plus a small stipend. Many fellowships even cover extras, like health insurance.

Assistantships could come in the form of a teaching assistantship or a research assistantship. A teaching assistant helps a professor teach classes or grade exams and papers. A research assistant might help a professor or the university conduct lab work or research studies or do book- or computer-based research. Like a fellowship, they often cover the full cost of attendance and offer a small stipend.

An institutional grant is similar to a scholarship. It’s a sum of money given to you by the university to cover the cost of your education. The only difference is you don’t have to apply for it. If you’re accepted to a program fully funded by a grant, you’re awarded the funding automatically.

For a list of fully funded Ph.D. programs, visit U.S. News & World Report.

If your program doesn’t have an option for full funding, don’t despair. There are still numerous ways to pay for graduate school without resorting to loans, including scholarships and fellowships from independent organizations and tuition reimbursement programs through your current employer.

If you end up taking out student loans, explore all your repayment options, including possible loan repayment assistance programs through a future employer.

When Getting a Ph.D. Isn’t Worth It

Although more education often leads to more money and a better career, that doesn’t mean it’s always the best move. So take the time to consider the possible downsides before committing the next several years of your life, and potentially tens of thousands of dollars, to further education.

In these situations, a doctoral degree may not be worth it.

1. You Can Get Away Without One

Although the statistics show many people earn more with higher degrees, that doesn’t mean you can’t earn more than a Ph.D.-holder with only your master’s degree. Many career fields reward work experience above higher degrees.

For example, public school principals aren’t required to have doctorates in education, but they must have teaching experience, according to the BLS. So if becoming a principal is your goal, the years you take getting your Ph.D. may be better spent in the workforce.

Granted, many careers require a doctoral degree. But for those that don’t, your experience and expertise could wow an employer as much as your fancy degree.

Chris Cornthwaite, the founder of Roostervane, a career resource for people with advanced degrees, notes that he’s worked alongside many master’s degree-holders who’ve been further along in their careers because they hadn’t stopped to take time off to pursue a doctoral degree, as he had.

So if you can get away without the doctoral degree, it’s probably better for your finances to skip it, especially if it requires taking time off work. Between the opportunity cost of time spent out of the workforce and the cost of the education itself, there’s not much point in investing the money if you don’t need to.

2. You Won’t Earn Enough to Make the Cost Worth It

As you would when considering going to school for any degree — whether it’s an undergrad degree, master’s degree (like a Master of Business Administration), or Ph.D. — you have to compare the cost versus your potential income. Just as some college majors have more career potential than others, some doctoral degrees pay off more than others.

Yes, the stats say the average Ph.D.-holder earns 22% more than a master’s degree holder. But it’s only an average and varies widely by discipline.

For example, a humanities Ph.D. working at a nonprofit won’t make the same as a pharmaceutical Ph.D. working at a biotech firm.

But simply knowing you’ll earn more isn’t enough. Will you earn enough more to make it worth it?

In other words, will your bump in income account for the time spent out of the workforce when you could be contributing to your savings, investments, and retirement accounts? Will it make up for the opportunity cost of missing out on accumulating work experience? Will it be enough to account for the monthly student loan payments if you have to borrow to cover tuition costs?

It’s impossible to account for every possibility, but the simplest way to calculate the value of a doctorate is to weigh the expenses against what your degree could earn you.

To make the calculation, start with:

  • How Much Your Degree Will Earn You. Estimate how much you’ll earn the first year, mid-career, and peak-career in your career field. Average those earnings over the number of years you intend to work to get an idea of your potential lifetime income with a doctorate.
  • How Much You Would Earn Without a Ph.D. You can’t really know if a doctoral degree makes a difference unless you compare the cost of getting one to the cost of not getting it. So if you have a master’s degree or a bachelor’s degree, what is your earning potential in your career field? Use the same formula to calculate it.
  • The Total Cost of Attendance. Estimate the annual total cost of attending graduate school, including tuition, books, and living expenses. Your school can provide this information. Note that tuition costs for your dissertation years are typically less, but completing your dissertation may take you longer than you expect.
  • The Amount You Need to Borrow. Estimate how much you’ll need to borrow, including the interest rate as you currently know it. The interest rate changes year to year for federal loans. Also estimate how long it will take you to pay them off. Use the loan simulator at Federal Student Aid to get an idea of potential monthly payments and the projected total repayment through various federal programs.

Many Ph.D.-holders earn an average of nearly $1 million more than master’s degree-holders over a 40-year work life. Thus, on the surface, it can seem as though there’s no need for the math. Even the most expensive doctoral degree doesn’t cost $1 million, which means every Ph.D. must have a positive value.

But not all careers have the same income potential, and the amount you borrow in student loans isn’t the amount you’ll repay — especially if you end up stringing out repayment for as long as 25 years in an income-driven repayment plan, which is common for graduate borrowers.

You could easily pay two or three times what you borrowed thanks to the effects of compounding interest. And that could eat up that $1 million in extra earning potential. That’s one reason income-driven repayment isn’t ideal for all borrowers.

For example, let’s say you want to pursue a doctorate in English literature to become a professor. The university you plan to attend says your total cost of attendance comes to $130,000. You plan to work as a graduate teaching assistant during your final two years, saving you $50,000. But you’ll need to borrow $80,000 in student loans to cover the rest.

According to the 2019 Cengage Student Opportunity Index, it takes an average of 20 years for students to pay off their loans. Using that repayment term and the 2021-22 federal student loan interest rates of 5.28% for graduate direct loans and 6.28% for grad PLUS loans gives you a total loan cost of $132,992, the actual cost of your education if you get the teaching assistantship.

But getting a teaching assistantship is never guaranteed. So the math without it tacks on an additional $50,000 ($182,992).

If you’re able to get a professorship, you’ll earn a median income of $80,790 per year, according to the BLS. Median income figures should give you a good picture of career highs and lows (meaning you’ll start your career at a lower salary and end higher). So if you plan to work for 40 years, you could potentially earn a lifetime income of $3,231,600.

With only your bachelor’s degree, the highest level of teaching you could attain is high school teacher, with a median salary of $62,870. You can work at least four more years since you don’t need to take time off for grad school, but your lifetime earnings are still only $2,766,280.

Adjusting for the cost of education, the difference in lifetime earnings between the two career paths is just $332,328 — a difference of 12%. That’s a very modest return on investment for all that effort and time out of the workforce. And if you take even longer to complete your doctorate, the average of which is almost six years, according to U.S. News, that return disappears altogether.

Thus, the job isn’t worth the cost of the degree.

Once you have your own numbers, you can start to calculate the value of a doctoral degree. Compare your lifetime earnings with and without a doctorate. Will you earn enough above a bachelor’s degree or master’s degree to make the cost of the Ph.D. worth it? Is there a big enough difference to make the time spent out of the workforce worth it?

3. It Won’t Guarantee You a Job

Although there’s no precise estimate, some experts find as many as 50% or more of those who get doctorates do so to become tenured professors. But the number of those who succeed is bleak — anywhere from 10% to 25% depending on the field, according to Inside Higher Ed.

A 1999 study conducted by the University of Washington found that 53% of all new doctorate-holders said they wanted to become professors. A decade later, just over half (54%) of those were tenured.

More recently, in 2013, The Atlantic analyzed the numbers based on National Science Foundation data and found that 23.2% of doctorate-holders in all fields landed full-time professorships in 1991. By 2011, that percentage dropped to 19.4%.

A 2014 study published in the journal Systems Research and Behavioral Science found that only 12.8% of doctorate-holders land full-time academic positions in the U.S.

And The New York Times reports that the number of jobs for English professors, just one representative sample of academic disciplines, fell a further 33% between 2012 and 2020.

The numbers vary significantly by field, but the competition in the academic job market is tough no matter which discipline you’re in. That’s because universities continue to graduate significantly more doctorate-holders than there are professorships.

And the situation is only getting increasingly dire with every passing year, as professorships continue to disappear in response to nationwide mass layoffs, according to Inside Higher Ed, leaving new Ph.D. candidates with even fewer job prospects. The coronavirus pandemic, which first impacted the U.S. in 2020, forced a crisis in higher education that resulted in some of the layoffs. But the truth is the crisis was a long time coming.

Since the 1970s, colleges and universities have been shifting away from tenure-track professorships toward adjunct faculty, or part-time professors, also called contingent teachers. Currently, adjunct faculty teaches 60% of college courses, according to The New York Times. And the American Association of University Professors reports that 70% of all faculty positions are nontenure track.

These contingent teachers must typically have doctorates but teach on a per-class basis, often earning an average of $2,700 or less per class. Many carry a course load of six to nine courses per semester, usually teaching at multiple schools just to make ends meet. (Full-time faculty typically teach three courses per semester.) And yet adjunct faculty still often make only an average of $32,699 per year, according to PayScale.

That’s about on par with what the average person with only a high school diploma earns. Thus, despite the already heavy workload, many adjuncts are forced to take on side gigs. And according to a 2015 University of California, Berkeley report, “The High Public Cost of Low Wages,” a quarter of adjunct college faculty receive public assistance, such as Medicaid or the Supplemental Nutrition Assistance Program (aka SNAP).

Worse, although most adjuncts teach full-time, stringing together classes at multiple schools, because they’re not classified as full-time faculty at any one school, they have to survive without benefits — they aren’t eligible for health insurance or retirement plans like 403(b)s or 401(k)s.

It’s a sad consolation prize for spending thousands of dollars and years of your life earning a Ph.D.

Yet as Bloomberg opinion columnist Noah Smith points out, doctoral graduates hoping to be full-time professors nevertheless often hang around working as low-paid contingent faculty similar to the way aspiring actors work as servers in Hollywood while waiting for their big break.

Meanwhile, professorial hopefuls have missed out on the opportunity to earn income during their years spent in grad school. They’ve also lost out on potentially more income working a regular job or during their postdoc, a temporary research position, usually undertaken by those in STEM fields, that allows a Ph.D. to gain skills and experience that prepares them for an academic career.).

And all for a position they’re unlikely to land. That’s because it’s not enough to graduate from the top schools or get your work published in academic journals. There simply aren’t enough academic jobs for the number of doctorate-holders who want them.

4. You Can’t Afford to Be Out of the Workforce for 4 to 8 Years

For many Ph.D. students, the real challenge isn’t the price of the tuition. It’s the cost of time — the opportunity cost. What will you miss out on during all those years in grad school?

While many Ph.D.-holders earn more than those with a master’s degree, they enter the workforce up to almost a decade later. Thus, even if you make more than a master’s degree-holder, it could take you a while to catch up. That’s especially true if you don’t work a full-time job while you’re in school, which most doctoral students don’t.

Even if you earn a stipend through an assistantship or fellowship, it’s unlikely to cover more than minimal living expenses. That means missing out on a significant amount of returns your savings could be earning in your retirement or investment accounts. It could also mean missing out on income raises that could further increase your savings.

The master’s grad has had longer to build their net worth — buy a house, pay down debt, invest, and pay off their student loans.

Plus, there’s your age to consider.

If you’ve just finished your undergrad degree and are in your early 20s, you might be OK spending the rest of your 20s in school. But if you’re in your late 20s or early 30s, spending that many years in grad school could mean missing out on other things, like starting a family. As a grad student, even if your Ph.D. is fully funded, you won’t be able to save much money or financially prepare for kids.

And if you already have a family that relies on two incomes, it can be problematic to take so many years out of the workforce unless you can switch to a single income. Pursuing a master’s degree may be more feasible for you since most are designed to help working professionals advance their careers. You’re more likely to find online one-year, low-residency, or night course options in your field.

Final Word

If I had the chance to do it all over, I’m not sure I would get a Ph.D. I don’t regret the education, but I do regret the debt I accumulated only to get stuck in what The New York Times calls “adjunctopia” for over a decade. I could have gotten almost any other job with just my bachelor’s degree and made more income. In fact, though I still teach part time, I’m now a full-time writer.

But everyone’s career path is different, so it’s worth it to weigh all the pros and cons as they relate uniquely to you. So think it through.

Be clear about whether a Ph.D. will help you reach your career goals. Make sure you know where you want to go and whether a doctoral degree is the only way to get there. And don’t expect to become a professor.

If you opt to get a doctorate, keep the amount you borrow below one year of your annual projected salary. That should allow you to pay off your student loans within the standard 10-year time frame, which the experts interviewed by CNBC consider a manageable amount of student loan debt.

Seek other ways to cover any remaining costs, such as grants, scholarships, fellowships, and university jobs.

And don’t lose out on the earning power of savings during all those years of higher education. There are useful retirement plans and investment options for graduate students that allow you to earn at least a little on your savings. These include Roth individual retirement accounts and exchange-traded funds that allow you to open an account with no minimum deposit or investment.

Micro-investing platforms even let you invest your spare change. Two options are Ellevest and Acorns. Though it may not seem like much, with the help of compounding interest, even a few dollars invested consistently month after month while you’re in school will grow over time.

Sarah Graves, Ph.D. is a freelance writer specializing in personal finance, parenting, education, and creative entrepreneurship. She's also a college instructor of English and humanities. When not busy writing or teaching her students the proper use of a semicolon, you can find her hanging out with her awesome husband and adorable son watching way too many superhero movies.

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