There are a number of financial factors that need to be evaluated when considering graduate school. Naturally, there are the typical expenses associated with an education, such as tuition, fees, and living expenses. These expenses can often be fully or partially covered with a scholarship, assistantship, fellowship, or another form of financial aid. Internship earnings or reimbursement through an employer’s tuition assistance program are also sources of funds for some. Another financial consideration is the “opportunity costs” associated with not having full-time employment for the two or more years that it will take to complete an advanced degree. Opportunity costs are usually recovered in a relatively short time due to the increased earning potential that an advanced degree in engineering offers. More information on some of the mentioned topics follow.
Graduate School Financial Considerations
Opportunity costs are the “costs” incurred by not enjoying the benefits or delaying the benefits that another option offered. For example, entry-level engineering positions for graduates with a BS degrees pay over $61,000 per year on average. Therefore, the near-term opportunity costs of delaying work for two years while pursuing an MS degree are considered to be $122,000. However, the entry-level salaries of graduates with an MS degree average $7,000 more than BS graduates. Assuming that this $7,000 compounds with a 3% raise each year, MS graduates will have reclaimed the $122,000 in just over 14 years and will earn significantly more during their careers than BS degree holders. The return on investment is even shorter for PhD graduates and their lifetime earning potential, on average, is considerably higher than both BS and MS degree holders. As discussed in the Why and When to Attend Graduate School section, a PhD generally changes the type of employment opportunities and should not be pursued simply to increase earning potential.
The cost of attending graduate school is often reduced by an assistantship or fellowship. The primary difference between an assistantship and fellowship is the funding source. It is called an assistantship when the funding source is the university and a fellowship when the funds come from outside the university or from an endowment. Some fellowships are similar to scholarships in that they are awarded prior to enrolling in a program as a recruiting incentive. There are other differences, such as the way the funds are recorded/distributed and whether the students are considered employees. Regardless of the differences, assistantships and fellowships generally provide the same benefit; they cover a portion or all of tuition and come with a living stipend.
At ISU, approximately 80% of PhD students and 35% of masters students receive an assistantship. These opportunities are not always advertised, so you may need to actively seek them out. Individuals holding assistantships are considered to be “in training”, and the assistantship is a form of student aid that combines training with income. The responsibilities assigned should be in line with educational goals and can include research, teaching and administrative duties. The standard assistantship appointment is 1/2-time and this comes with the general expectation that 20 hours per week should be spent on assistantship duties. Some programs also offer ¼-time assistantships. At some schools, like ISU, students on an assistantship get the added benefit of paying in-state tuition.
If you are not taking summer classes or conducting research with funding from an assistantship/fellowship, then you may have your summer free for an internship. Professional work experiences are important on a resume and add particular value if your goal after receiving your graduate degree is to work in industry. They also pay well. If you already have a BS degree, your pay as an intern will likely be close to the starting salary of a full-time entry-level position.
Many employers support the concept of life-long learning and reimburse their employees for courses completed towards a degree. Many are also willing to adjust work schedules to accommodate educational needs. Online degree programs make it possible to earn a graduate degree at a school that is well beyond the commuting distance. Going to college and working full- or part-time is a great financial decision for many.
For additional information see the ISU Graduate College’s information on financing graduate study (www.grad-college.iastate.edu/common/finance/)