One of the ways to look at a degree is what would be the return on your investment on education. It can be monetary or non-monetary. In this article, I will try to give my opinion on this and give some traditional and non-traditional thinking about MS in USA. This article is part of the series Guide / steps to study in USA for International students? How to plan?
How much does MS Cost?
As I have explained in previous article, What is the cost of studying in USA ? MS in US Cost? , you will have to pick and choose schools based on your financial situation and your scores. For the sake of example, I am taking average and considering $ 7,000 for tution for a semester and $ 3,000 for expenses. So, for four semesters it will be $28,000 + $12,000 = $ 40,000. It can be less like $20,000 or even less too(may be no cost) depending on scholarships, etc. I am just taking an average.
How much will I make after MS in USA? Average Salary After MS in USA ?
Though, it is getting tougher with the new H1B rules of 2011 to find a H1B sponsor, let’s assume you successfully graduate and get H1B visa to work in US and you join a company that pays minimum wage for an MS graduate. Let’s take average of $50,000 dollars. I know people in IT Jobs who start with $80,000 and even make more at their first job. But for the sake of reality, lets assume you take up a job in small firm that pays you just the H1B minimum wage or LCA prevailing wage in an area . You can see from below statistics from Indeed job search site that it can be as low as $34,000 too. For the sake of reality, lets take $50,000 as average salary.
How much will I save after MS in USA and working in Job ?
Thought it seems we are making $50,000 salary per year, you have to pay 33% of it as taxes for the most part unless you live in state like Texas where there is no state tax. Lets assume you are paying 33% taxes to IRS, then you have net income of $33,500 per year, which is $2,791 per month. Imagine you buy a new car and live in a single bed house in a decent outskirt of city and go out few times a month ( NOT in Manhattan or downtown ). At the minimum, your expense are around $1,700 – $ 2,000 per month including your monthly payment for Car. Lets say, you have 1,700 as expenditure per month. You are now left with only $2,791 – $1,700 = $1,000. You are only able to save $1,000 only if you have a decent life style. Some may argue with this, but in all reality if you live decently and make only 50K per year this is how much you will be saving.
Break Even Analysis of MS in USA :
As we have spent almost $40,000 for education and we only save $1,000 a month, it will take us 40 months to clear our debt. Our breakeven point is after 3 years 4 months. That seems quite long. May be if you get promotion and make more money you may clear a few months early may be 3 years or 2 years 9 months… This is only if you make 50K after graduation. If you make more, you clear early. You can look at the Average Salaries in the same places as above with Bachelors in USA and see the difference. It is not that much. In fact, some people do not hire MS students because you are over qualified and they cannot pay you that much as the state and USCIS mandates that you are paid as per minimum wage.
Traditional Thinking about MS and ROI :
As per traditional thinking you are making around an average of $7,000 more with your MS than Bachelors.
ROI = ( Profit / total investment )* 100
ROI for MS in USA = 7,000 / 40,000 * 100 = 17.5 %
That’s a pretty good return right? Yes and NO. If you have taken loan for 12% interest from your home country, you are making only 5.5% that’s your real return. It does not sound good, if your interest rate was less then it is good. Also, you are not making any money until 3 years 4 months or actually longer(with interest more money) until you pay off the loan. Also, imagine a person with Bachelors gets experience and moves into bigger roles after 5 years he makes as much as a masters degree person. It does not make much difference then. I am thinking very traditionally here J Anyways, traditionally thinking about MS in USA, it does not seem very attractive. The cost vs benefit of MS is not very impressive with 50K salary. It may seem attractive if you start in a 80K job and do not spend anything for MS education.
Non-Conventional way of thinking about MS and ROI :
As I wrote in my previous article about MBA and return on MBA and is it really worth studying in US, It is not just money that you should look at when doing a cost vs benefit analysis.
- You are getting higher education and information that is invaluable.
- You are investing in yourself. You are investing to grow yourself mentally
- You are getting to know how things work internally in your field of interest.
- You are studying in a new environment and learning new things.
- You are constantly challenged to balance school, work and finances
I can keep on writing…some may argue, I do not care I just need money, that’s why I am coming to US for MS…for someone who thinks on those lines of money, honestly MS is just waste of time and money. You can get the same or actually more money by getting experience working and coming to US on L1 visa and then getting H1b visa. L1 to H1B has many advantages. For someone, who do not care about money and care about research, PhD or learning more in their field of interest, it is a good way to look at MS in US as investing in yourself seeking your passion for self improvement and knowledge.