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Does Going Back to School Actually Make Financial Sense?

Marianne Hayes

In 2008, I had the ambitious desire to get my master's in special education. So I went all in, quitting my waitressing job and taking out thousands in student loans.

Teaching ended up being very different from what I'd envisioned, translating to high stress, a significant pay cut and little time for my family—plus a mountain of debt I'm still paying off, four years after quitting to pursue a more lucrative freelance writing career. We all know what they say about hindsight, but going back to school may have been my greatest financial faux pas.

According to the Council of Graduate Schools, applications and first-time enrollment in U.S. graduate programs are on the rise; the number of applications for master’s and research doctoral programs surpassed 2 million in 2015. But if there’s one thing I learned, it’s that pursuing an advanced degree doesn’t always pay off.

Here are three questions to ask before you enroll to make sure the ROI is what you’re after.

1. Do the numbers make sense?

Check sites like Salary.com, PayScale and Glassdoor to get a sense of how much you can reasonably expect to earn with an advanced degree, suggests Kerry Hannon, author ofLove Your Job: The New Rules for Career Happiness.”

If you’ll stay in the same industry, are you likely to score a significant pay increase quickly? If you’re transitioning to a new one, can you afford a potential income dip while paying off student loans? Either way, get yourself in good financial shape before making the leap, including paying off any high-interest debt and building up your savings.

2. Do I really need an advanced degree to snag the job or salary I want?

Getting an advanced degree doesn’t always guarantee a better job. Graduate degrees in criminal justice, human services, public administration and business management are notorious for underemployment, for example.

Kelley Olinger, who made the jump from sales manager to personal finance coach earlier this year, says her $42,000 MBA wasn't as valuable as she'd hoped. "An MBA wasn't absolutely necessary,” she says. “I've learned the most by being out in the field, making mistakes, reading and meeting people in my industry."

On the other hand, some programs can help you command higher salaries and positions and plug you into a rich networking community that can open doors for you. Connecting with other grads (especially in your field) before enrolling can give you good insights into what you can expect. You can also look at where alums are working now.

3. Can I offset tuition costs?

A little over half of U.S. employers will kick in toward graduate degrees, according to the Society of Human Resource Management. Amanda Ponzar, a marketing exec in Virginia, scored a free education—twice. When she got her master’s in media communications in 2005, her employer covered the $5,000-per-semester tuition with no strings attached. Five years later, another employer paid for her to attend executive training at Harvard Business School in exchange for staying with the company one year after completing it.

"Salary jumps aren't immediate, but every time I changed jobs, the advanced degrees helped me get an increase and the next title up—easily anywhere from $10,000 to $20,000 more," she says.

Hannon also recommends finding out if you’re eligible for student loan forgiveness programs, as well as looking into grants and scholarships to help offset costs on the front end. (Fastweb.com is a favorite go-to resource.) "Don't just jump in and start writing checks for tuition or borrowing money. First see what free money is out there," she says.

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