Grad school is an investment – you spend time and money early in your career with the expectation that it will lead to better opportunities and higher salaries down the road. But would two stellar degrees set you up for even greater success and earning potential? Maybe, but maybe not. Completion of a joint degree program entails a significant additional investment of resources, and you should closely analyze the opportunity costs in order to figure out whether a joint degree program is right for you. For many prospective students the chance to earn two degrees at a top tier university will be an opportunity too good to pass up. For many others though a joint degree may not make sense. Here is a framework for thinking through this difficult decision, based both on things I considered prior to matriculating to Harvard for a J.D./MBA and things I didn’t think about but probably should have.
The analysis below considers whether to obtain a second (joint) degree, assuming that you are already committed to getting one degree at a top school. Although I will attempt to present a general breakdown, I will use numbers and thoughts specific to a Harvard J.D./MBA on occasion, simply because this is the joint program with which I am most familiar.
Is a joint degree worth it financially?
Most joint degrees allow you to save a year versus completing the two degrees sequentially. However, the additional costs are still significant. From a purely financial perspective the question is whether over the course of your career you will be able to recoup the extra year(s) of tuition and the opportunity costs of not working while completing your additional degree. I think the best way to analyze the purely financial aspect of this decision is through a discounted cash flow analysis. In other words, the outcome will hinge on how much more you think you can earn over your career with the additional degree.
Because this is primarily a b-school oriented blog, I assume you, as a prospective student, are already committed to going to Harvard b-school and are trying to decide whether to also pursue a law degree (two extra years) or an Masters in Public Policy (one additional year). I used the following assumptions:
- Career remaining right now: 35 years
- Additional cost of J.D. – two years at Harvard Law School, including tuition and cost of living
- Additional cost of MPP – one year at Harvard Kennedy School of Government, including tuition and cost of living
- Average starting salary for MBA only = 2010 average starting salary for HBS grads
- Average annual raise = 3.6% (this is quite variable based on industry, personal performance, etc., but I based this number on a Wall Street Journal article from 2006 – before the current recession)
- Cost of Capital = risk free investment rate of 30-year T-bonds (4.12%)
Using these assumptions, your starting salary would need to be 9.2% higher with an MBA/MPP or 19.5% higher with a J.D./MBA in order to make up for the additional investment. If you expect to receive higher than average (3.6%) raises over your career, the amount of additional starting salary needed to catch up over 35 years increases.
From a financial perspective then, one way to look at the question is to ask whether the additional degree will enable you to coax 9%-20% more from your post grad school employer or to get into an industry that pays 9%-20% more on average.
Will a second degree open up additional job opportunities?
The obvious answer is yes – BUT… this is most true in fields for which the second degree is a requirement (e.g., law), or where you have a very clear idea of what you want to do after grad school and how both degrees support that direction. Although a second degree is unlikely to be a serious detriment to your future ability to get a job, it is not true that “it can’t hurt.” All else equal, employers would prefer to hire b-school graduates who are likely to remain with the company for a significant time. A second degree in an unrelated field opens applicants up to additional (although not insurmountable) scrutiny regarding commitment and career direction.
Is there anything else I should consider?
The one factor that I wish I had put more thought into prior to going back to school for four years is the importance of doing something productive and meaningful with one’s life. After having spent time in the workforce (as most MBA students have), going back to school can feel somewhat unproductive after awhile. Reading cases and going to class just isn’t doing a whole lot to make the world a better place. Hopefully grad school sets you up to make bigger differences in the future, but you will not be doing a whole lot to make anyone’s life better while you are at school. For me personally, a two year “break” to go back to school felt about right – during my final two years I was very ready to be doing something more productive than going to class.
Another factor that will play into many people’s decision making is prestige. Here, having two degrees is certainly superior to one. This point is likely to serve as the X-factor for many prospective students. After thinking through the financial and job opportunities that may arise from an additional degree, you may find that a second degree does not objectively make sense – but you still want to do it. That decision is not irrational or wrong as long as the prestige value of having two degrees outweighs the additional financial and time investments you will be making.
Whether or not to pursue a second graduate degree is a tough decision that will play out differently for every person. This article provides a framework for analyzing the financial and non-financial implications of that decision in an attempt to help you make the choice that is best for you.
- Kurt W., Guest Blogger, HLS/HBS 2011 (Bio)