With many people losing their jobs or experiencing reductions in pay due to the COVID-19 pandemic and resulting social distancing efforts, it’s not outrageous to wonder if now’s a good time to go back to grad school.
Applying for grad school could help you advance your career, especially if the economic slowdown has significantly impacted your industry. If the steady chorus of, “Should I go to grad school?” has been playing in your head as you face an uncertain job hunt, you’re not alone.
To decide whether grad school is worth it right now, you’ll need to know the benefits of getting a master’s or other advanced degree and have a long-term plan.
Advantages of attending grad school during a recession
If you need a professional degree to advance in your field, using this time to attend grad school can be a savvy decision. Here are some reasons why a recession might be the right time for you to go to graduate school:
1. Lower opportunity cost
Every opportunity you pursue is going to come at a cost — you might lose a potential gain from other opportunities. For example, if you didn’t go to grad school, maybe you might have qualified for your dream job or received a significant pay raise. In a booming economy, the lost opportunities of heading off to grad school might feel more pronounced.
In a recession, however, you’re less likely to pass up potential work opportunities by heading back to school. With 21 million people out of work as of May 2020, according to the U.S. Bureau of Labor Statistics (BLS), there’s a lot of competition for the remaining jobs.
2. Deferred federal loans
One of the federal government’s responses to the COVID-19 pandemic was announcing deferrals on student loan payments from March 13, 2020, to Sept. 30, 2020. If you currently have student loans from your undergraduate degree, you don’t have to make additional payments at this time, which could help you save money for graduate school right now.
The federal government hasn’t been clear about any future aid for students as a result of the ongoing coronavirus pandemic but it’s certainly something to keep an eye out for in the meantime.
3. Low federal student loan interest rates
During a recession, it’s common for governments to lower interest rates to encourage spending. For the 2020-2021 academic year, the U.S. federal government announced a change to student loan interest rates: Direct Unsubsidized Loans for graduate borrowers now have a 4.30% interest rate, down from a previous 6.08%.
If you were planning to go back to graduate school eventually anyway, doing so during this recession while federal student loan interest rates are lowered might be your cheapest opportunity.
4. Become more competitive in your field
BLS data from 2019 shows that graduate-degree holders had the lowest unemployment rates and highest earnings. Keep in mind that this is an average amount and that not every profession requires a graduate degree.
That said, in some fields, a graduate degree is required, and in others, the base salary for those with graduate degrees is more than for those without. For example, if you want to become a psychologist, you will need at least a master’s degree, if not a doctoral degree, to practice. In that profession, those with PhD degrees earn an average of $10,000 more per year. If you’re concerned about standing out in the job market, a graduate degree could be a boon.
Is grad school worth it?
Although there are strong reasons to attend grad school during a recession, grad school is not going to be the right fit for everyone. Here’s what you need to consider before you jump into pursuing a new degree.
Increased student debt
Graduate degrees can get expensive. According to the National Center for Education Statistics, the average cumulative graduate student loan debt, including undergraduate debt, was $186,600 for those graduating with a professional doctorate.
Keep in mind that there’s no way to predict exactly how long the recession will last or how long your job search will take after completing your master’s degree. You might not necessarily score a top-earning job right away.
Because the cost of a graduate degree is quite high, many borrowers need to pursue federal loan forgiveness. If you’re in a profession that isn’t eligible for any federal forgiveness options, you might want to strongly reconsider your plans.
Other options could be just as satisfying
If your planned graduate degree will likely pull you deeper into debt and won’t significantly raise your job prospects, it might not make financial sense to go back to school — even if you just lost your job.
Losing your job can be jarring, but if you feel like you “just need time to figure it out,” there are other ways to do that without going to grad school. You can spend some time traveling (safely), pursue a certification in a specific skill, or do something completely unrelated to your career path to regain your momentum.
During this time, be proactive about managing your undergraduate debt so you don’t fall behind on it. Here are some ways you can better manage your student loan debt during the recession:
- Take advantage of federal loan deferment. Because you don’t have to make payments on your federal student loans until Sept. 30, 2020, you can take this time to either save for future goals, such as traveling if allowed according to your state laws.
- Reach out to your lender. Even though communicating with your lender can feel daunting, you might be surprised to learn that many lenders are willing to negotiate a new payment plan with you based on your circumstances. For example, SoFi’s Unemployment Protection offers borrowers who are terminated from their jobs through no fault of their own the option to have their loan payments suspended for up to three months. Check with your lender to see what allowances it can make in your scenario.
- Income-Driven Repayment (IDR). If you aren’t already on an IDR plan, you might want to consider switching to one that’s right for you. There are four different IDR plans, each of which has slightly different eligibility requirements: Income-Based Repayment, Income-Contingent Repayment, Pay As You Earn and Revised Pay As You Earn. All IDR plans are designed to help you find right-sized monthly payments so you can keep up even if your income takes a hit.
- Get a side hustle or a part-time job. Taking a break from your career to reassess your direction doesn’t mean you have to stop working altogether. While you might decide that you want to devote the next few months to spending more time with your family or focusing on your home renovation, there can also be a way to still earn money by participating in the gig economy or getting a part-time job. Having some cash to help your budget buys you more time to decide on your next steps.
Should I go to grad school now?
Deciding whether now’s the right time for grad school means weighing a lot of factors such as how much grad school will cost and what your earning potential will be when you finish your degree. To help sort through these decisions it can be helpful to schedule a pre-debt consultation with one of our advisors to understand if grad school is the best choice for you.