Thursday, February 01, 2007

Paying for Grad School

A good article about whether to pay for a graduate degree. My usual advice is if you aren't going to do a degree in a lucrative and/or high demand professional area (business, law, medicine, physical therapy etc.) don't pay to go to grad school. Even if you are rich, if the school or some other sponsor doesn't want to pay for you then that should be a warning sign that maybe this isn't a good idea. Of course, if you really just want to do it for fun and you have the money, go ahead...

Even some of the students whose PhDs we pay for (I am director of graduate studies for my department) turn out to have been bad investments. Perhaps a quarter of them really shouldn't have done a PhD. If you count those who ended with a masters (while they planned on getting a PhD) maybe up to half of admits are a bad investment. Now maybe some people we refused funding to would have been good investments. But I like to think we do know a little when we make these decisions and that most of the people we don't fund shouldn't go to grad school.

7 comments:

Anonymous said...

I didn't get funded for my graduate studies in mathematics, but got student loans and a stats consulting job on campus to pay for tuition and expenses. Several of the faculty seemed to think that I shouldn't have been there, but I did have supporters as well.

I did get my degree, and, needless to say, I came out of school with a lot of debt. But the degree has opened a lot of doors for me, and I do earn a good salary (better than almost all of my funded peers).

On the other hand, the experience of being shunned and the debt load I carried for several years after graduation left a bitter taste in my mouth. I would not give money to the school under any circumstances. I have helped the professors who offered support, getting them consulting assignments at my company and jobs for a few of their students.

mOOm said...

Was this for a masters or a PhD? Generally, there is a lot less funding available for masters degrees. The fact that we wouldn't fund a student for a PhD doesn't mean that they shouldn't be going to grad school but that our department and maybe field isn't the best choice. For example, some students maybe should have done an MBA rather than to try to do a PhD in econ. Or maybe there is another econ PhD program out there that would match them better. Match between student interests and faculty expertise is very crucial at the PhD level.

Personally I wouldn't have gone to grad school without the funding. Coming to the US no loans were available and nor could I work in the country off campus. I filled out living expenses with credit cards and some money borrowed from my Dad. But the tuition and a basic stipend were absolutely essential. In my home country I got funding for a masters but funding for a PhD would have been more limited. I guess I may have done it part time in the end as I could have worked there. It would have been a big struggle.

Jacqui said...

My husband and I share similar experience with you, and I agree with you that paying for graduate school is not a very good idea.


As you can see from our blog http://latestarters.blogspot.com, we started everything late (including blogging), partially due to the graduate student life. Going for PhD was a bad investment particularly for me, becuase I ended up with 3 masters:(

Even though I got full funding for all my 6 years in graduate school (in fact, I had 50K in saving by living frugally and saving every penny from the stipend and RAship), thinking of the opportunity cost, it is definitely a terrible investment.


I think that the worst thing of being in a PhD program, particularly in top school, is that I was "brain-washed". I felt that nothing was worthwhile other than writing a paper. I will get an A in financial economics, and put all my money in savings account, because I do not really have time to study the real financial market.

Now I am back to real life, and the things I learned in graduate school are not of much use on the job market. I thought I could look for a job in finance, but found out that I am too old. Those I-bankings or hedge fund would rather have a fresh BA with good math "intuitions" than hire an old "ABD" who can only derive some "trembling hand perfection" equilibrium (what a wired name!)

I hope it will be better for my husband. At least he got his PhD. But he is in a different filed. He has to go through postdoc, which means minimum wage for another year or two :(

Maybe I should encourage my husband to work in Industry. But then we get our visa problem. It might be easier to get green card if he stays in acadmia. He could have applied long ago, but...... he was brain-washed too.....

Yes, overall, I agree that it is not a good investment to get a PhD, unless you really feel passionate about it, or you feel that you can get Nobel Prize, or it is in Finance, law, medicine....

I do not really regret coming for the PhD program. That was the only way I could get funding. I just regret that I did not realize that I was not the academia type. I regret that I did not wake up early when I was suffering.

I guess that I get a little emotional here. Hopefully time will eat my bitterness away soon.

mOOm said...

Hi Jacqui

I got my PhD in 1994 in geography. I did an undergrad degree in economics and geography and now I am an Associate Prof in Economics in a rather unusual economics department. I find actually that my training is very useful in developing trading models (time series analysis) and thinking about investing and vice versa - especially when I am teaching intro economics and intermediate micro-economics (which we call managerial economics in this program). The main drawback of academia from my perspective is the very small number of jobs in any highly specialized area and the total lack of choice in location. And now after 10-12 years or so post-PhD I've got rather bored with the research areas I started off in. TIme for a new career which likely will be as a full time trader and maybe doing some kind of consulting with investment companies or something. We will see. But first I need to get my green card which has been a horribly frustrating process. Of course I could move back to Australia or Europe. But I am so close to getting it and my partner doesn't want to move now I think (she is from PRC).

Jacqui said...

You are the first commentor to our later-starters' blog. Thanks a lot!

Actually, after I first read your blog, I guessed that you got your PhD in statistics. I did not know that geography used lots of time series. I thought it might use some spatial data and models.

In any case, your career path is incredible to me. I can't imagine teaching intermediate geography some day, even if I finish my PhD in economics.

Yes, the lack of choice in location is a big problem in adcademia. The lack of leisure time in the first 6-7 years before getting the tenure is even more scary. I feel lucky that only my husband has to deal with it now:)

Actually, what amazes my husband and I most is that you can be a professor and a day trader at the same time. We always feel that we do not have enough time to research the market. My husband believe more in fundamentals than in some random walk theory. He has to do a lot of research on the company before he can make a decision on a single stock. So he ended up buying mutual funds, letting others do the research for us.

I do not have much faith in techinical analysis too. I think that to say that the stock price is following some geometric brownian motion is a "HUGE" assumption. Of course I might be wrong. I do not really know much about the stock market. All I learned is just text-book econometrics. However, some how, I feel that it is those "Market Events" that
help make money in day trading, and I just do not believe that we can model market events.

I am really curious about your trading model. I will keep reading your blogger, hopefully, I will regain my faith on econometrics models from your blog :)

Thanks again for being our first commentor!

Anonymous said...

Ok, this is a very very late comment, but I had to say this.

When I applied for grad school, I did not have any money to fund myself through all the years...and neither did my parents have that kind of money. My only option was check the box that said "I do not wished to be considered for admission without financial aid." And that worked well. At least 5 schools replied with good offers.

Currently it's exactly like Jacqui says above:

"I think that the worst thing of being in a PhD program, particularly in top school, is that I was "brain-washed". I felt that nothing was worthwhile other than writing a paper. I will get an A in financial economics, and put all my money in savings account, because I do not really have time to study the real financial market." ...couldn't have said is better. :)

mOOm said...

It's like a religion. Those who quit academia are like apostates. You are supposed to sacrifice everything else to stay in academia.