Back To School? If you've been thinking about going back to school as a way to make more money, think again.
(MONEY Magazine) – MONEY interviewed two dozen executive recruiters, professional-association heads and human-resources staffers. They agreed that in most fields an advanced degree is no guarantee of a bigger paycheck.
But what about all those surveys showing that the more education you have, the more money you make? After all, an engineer with a master of science degree typically makes 28% more on his or her first job than an engineer with an undergraduate degree and similar work history. And a chemist with a master's degree and four years of experience will, on average, earn 18% more than a chemist with the same experience but only a bachelor's degree.
Those numbers don't tell the whole story. For engineers, that 28% gap shrinks in only four years to 5%--enough for the one with the graduate degree to pay off those extra student loans, with not much left over. For chemists, the pay differential is just 5% after 10 years on the job.
"Employers these days are looking for specific skill sets, not degrees," explains David Cowen, who does executive searches for companies like AT&T, Pfizer and Sony. "It's all about hands-on smarts, not book smarts," he adds. Example: Microsoft requires software technicians to pass its own certifying tests, regardless of their education. And Microsoft-certified software engineers can earn $11,000 more a year than their peers, says an MCP magazine survey.
Are there circumstances in which an advanced degree can boost your salary? Yes--with some caveats. Earning an M.B.A. from a top 10 business school, such as Stanford or the University of Chicago, virtually assures you a starting salary of around $80,000. But attending school full time means losing two years' salary--and, most likely, paying off hefty student loans.
An M.B.A. from a less elite school won't cost you as much, but it won't help you as much either. "A lot of going back to school is about networking, and the name schools have an edge that other places don't," says John Challenger of the Chicago outplacement firm Challenger Gray & Christmas.
That's why our experts suggest going back to school only after you do two things: First, make sure that your company offers tuition reimbursement; nearly 75% of employees of large companies are eligible. Second, get an assurance from your boss or the human-resources department that more education will help you come salary-negotiation time.
That's exactly what Mark Zaroogian, 32, did before enrolling in an executive education program at San Diego State University. With his M.B.A. in hand, Zaroogian moved from security administration at General Dynamics to coordinating research and proposal funding for the electronics defense firm. He now earns $63,000 a year, 15% more than he did before. "And I'm going to make a lot more down the road than I would have without the degree," Zaroogian says.