Question: It is time for potential graduate students to hear back from schools. I was accepted to two top-rate, out-of-state schools and will likely get into an unranked in-state school. I compared the cost of out-of-state schools to the in-state school; the difference (over the 10-year repayment period) exceeds $55,000! All graduates have to pass a standardized national exam to be licensed, and all graduates in my field are employed. Is the difference in quality and reputation worth the extra debt? Will my starting salary be affected, and how important is that over the course of my career? Jordan, Raleigh, NC

Answer: This is an extremely important question. It's also in the news with a number of law schools being hit with lawsuits alleging that the schools misled students with their job success numbers. The core beef is that advertised numbers didn't say that a number of graduates were employed in low-pay work, which didn't require an expensive degree. The concern about the job payoff from earning a graduate degree isn't confined to law schools. It's a worry for other professional programs, from MBAs to MFAs. 

The answer comes from making a reasoned calculation between reward and risk. My recommendation is for you to talk to a lot of people before deciding. In general, a lot will depend on the conventions of your chosen field and your desire to stay local or national.  There are a lot of factors to consider. The list below describes the factors that go into MBA jobs and salaries. However, it's also a good template for thinking through any professional degree.   

  • Your school's reputation
  • Post-MBA role
  • Geographic location
  • Industry in which you are employed
  • Cost of living
  • Pre-MBA experience
  • Undergraduate major 

Let's say you want to stay in the area you're in now and where the in-state school is known. You know the bill for getting your degree will be much less. What is the job and career experience of graduates from the school in the region? Does the degree open up the kind of opportunities that justify the effort and expense? Do you have a home-grown network in your community that will work on your behalf to get you a good job in the field once you've graduated? (Networks are invaluable.) Do most graduates do well in the job market, or do you have to be in the top 10 percent of a class -- or the top 10 -- to get the kind of job offer you want?

That's one calculation.  You want to quantify your downside risk. That means reaching out to recent graduates, talking to potential employers about their perspective of the degree, calling up competitors to see what they have to say about the school, and so on. 

Now, what about the ranked out-of-state programs? You've calculated that the cost of a degree from one of these schools is an additional $55,000-plus. Is that a lot of money or not? To take an extreme example, for graduates from the Stanford MBA program, the median salary was $125,000. The median at Harvard Business School and the University of Pennsylvania's Wharton School was $120,000, according Poets & Quants, an MBA-tracking website. Of course, those are top numbers. You'll still want to quantify the odds of the more expensive degree getting you a better salary and career -- or not.

What if you go to the more expensive school and the kind of jobs you're aiming for don't materialize? What is your real downside risk? That your future spending will be crimped for about a decade, or that your standard of living will plunge from the debt burden? Again, I would talk to potential employers and recent graduates, trying to gauge the upside career potential to downside financial risk.

Then it all comes down to deciding which bundle of risks you're more comfortable living with. You can't get rid of the risk; the uncertainty is inherent in the degree. But you can decide which odds you prefer.     

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