Which is more valuable: master’s degree or work experience?

Many Americans face this dilemma after graduating from college. For some critics, pursuing a master’s degree prolongs debt obligations, especially in the wake of rising tuition fee, endless student loans, and weak employment. However, many have not taken into the account the reality of stagnant wages and disappointing unemployment rates.

While US unemployment is slowly declining to pre-crisis levels, several college holders are overqualified for the jobs they take on. Still, the rate of graduates with no jobs is 2.5%. Also, some fields like education and psychology require more than a master’s degree for entry-level positions. Those who contemplate postgraduate studies must evaluate numerous factors to find out whether a master’s degree or work experience is more reasonable, economically speaking.

If you choose to take a master’s degree…

You must find out the related expenses, job prospects, income, debt obligation, and possible impact on savings and retirement. In terms of finances, master’s degrees with highest returns include computer science, engineering, and mathematics. STEM majors surpass arts and humanities, with engineering and computer science students attaining a 20-year annualized return of 2%. The projected lifetime earnings for master’s degree holders in the fields of computer science, engineering, and math vary from $3.5 million to $4 million. In less technical studies, including education, psychology, and visual arts, lifetime earnings range between $2.2 million and $2.4 million.

Aside from selecting a specialization, one must decide between studying in a physical school or taking an online program. The difference in tuition fee, between graduate programs from a public institution versus a private university, is approximately $12,000 on an average. But the difference between equally rated public and private colleges is not that significant. More often than not, private universities provide more exceptional research and academic opportunities.

Today, online degrees have become an alternative to a physical college or university. General misconceptions about online universities are programs are less expensive than degrees from physical institutions, as well as lack credibility. For an online program, the average in-state cost per credit is $277 compared to $243 at a physical campus. And since online universities and the traditional institutions have almost similar costs, they also have the same returns. Let’s say an online degree comes from a prestige university with distinct recognition and conventional campus, recruiters indicate no negative hiring effects for studying a master’s online.

If you want to improve your work experience…

You will have more opportunity to earn money and can save more money since you will be foregoing a master’s program. In other words, more money for you. On an average, spending for a two-year master’s program ranges between $30,000 and $120,000. The standard income for graduates with college degree is around $45,000. Based on estimates, a two-year work experience will result to annual pay raises of 3% approximately. Aside from savings and salary, this will increase chances for promotions and widen networking opportunities.

But here’s the catch to this problem: student loans. This is one of the biggest problems affecting young Americans. For majority of them, they need to secure loans to cover tuition and living expenses related to postgraduate studies. The total US student loan debt is $1.2 trillion, with 70% of college graduates accruing an average of $33,333 in debt. Most undergraduate students are still carrying a considerable amount of debt, so they might not welcome the idea of a master’s degree. But those who want to do so, the median obligation of a graduate student is $57,600, and can exceed $150,000.

Considering all factors, which is more important: master’s degree or work experience? Let me leave you with this thought: real-world experience goes beyond the four walls of the classroom.