Should I Pay for My Child’s Graduate School?

1. Be Honest with Yourself, Your Child, and Your Budget

Parents always want to help their children, which could leave you feeling obligated to offer financial assistance if you have the resources.

When it comes to paying for graduate school, though, there are no haves, shoulds, or musts. Post-graduate education may be an endeavor your child is passionate about, but that doesn’t mean you should sacrifice your financial future to build theirs. 

If you’ve saved for years to cover undergraduate expenses, you may not have room in your financial plan to fund another degree — and that’s more than okay. Maybe you already redirected your savings from education to retirement when your child went off to school, or maybe you’re committing those extra funds to other financial goals like paying off debt, buying a retirement home, or saving for a wedding.

Before committing to paying for graduate school, understand how you feel about it and what you might have to give up to pay for it. Ask yourself:

• Is paying for graduate school a priority for me? Why or why not?
• Do I have ample room in my cash flow plan to help out?
• Are there other ways I can support my child, like inviting them to move back home, minor financial assistance, or helping them with certain living costs while they’re in school?

Having these conversations up front will help you evaluate the situation and determine the best course of action.

2. Have Career Conversations Before Committing Funds

Graduate school is expensive, so before writing a check, it’s essential to have open and honest conversations with your child about what an advanced degree means to them and their larger career goals.

You might ask questions like:

• How will you leverage this graduate degree in your career? 
• What would your career look like without this degree?
• What are everyone’s fears about this commitment? What are everyone’s best hopes?

Some professions require advanced degrees. These include the medical field (doctor, dentist, nurse, anesthetist), college professors, and other industry specialists (historian, anthropologist, economist). That said, not all professions do. 

Talk with your child about how they will apply their degree to their career and personal development. Is the degree necessary or simply nice to have? Are they ready for the rigors of graduate study? Have they considered all their options? 

Remember, even if their chosen career path requires graduate study, it doesn’t mean you have to contribute to their schooling. Another question you may ask is:

• Is there potential for income increases or other career advancement opportunities? 

Successfully completing graduate programs like MBAs, graduate nursing programs, and computer sciences can offer lucrative opportunities like a better title, more competitive salary,  and wider career advancement paths.

The Bureau of Labor Statistics also found those with more education tend to have higher weekly earnings. The median weekly earnings for a full-time worker over 25 with a bachelor’s degree is $1,305. For someone with a master’s degree, it jumps to $1,545. And those with doctoral degrees earn the most at $1,885 per week. 

That’s a 30% difference between workers with bachelor’s degrees and doctoral degrees! In some cases, the extra letters after your child’s name could offer many long-term financial benefits. 

Be sure your child has done their research and thought deeply about why they want to attend graduate school, then ask: 

• Why is this graduate degree important to you? What would you like me to understand most about your pursuits?

The best ways to spend money is to open up possibilities, expand your horizon, and exemplify your values. This is a valuable lesson to teach your kids, especially when such large amounts of money are at stake from parental contributions or student loans.

Explore your child’s passions about their degree and why they’re excited to pursue it. These conversations can help ensure both of you spend money in ways that align with your goals and values. 

While these conversations may seem more advanced than talks you had before their undergraduate degree, trust that your child is ready to have them. It’s more than okay for parents to ask detailed questions before committing funds to a graduate degree. 

3. Don’t Sacrifice Your Retirement Nest Egg

Many parents with children considering graduate school are in their peak earning years — and building wealth in your 50s is critical for your long-term financial health.

This means it’s important to take advantage of present opportunities and properly save for your future.

Just like saving for college the first time around, your retirement plan should take top priority. You’re even closer to retirement now, so you should distill extra savings and investing endeavors into your nest egg. 

If paying for graduate school detracts from your retirement savings (like taking a loan from your account, contributing less per month, or pausing contributions), it’s likely best not to take on that added responsibility.

How can you more intentionally fund your retirement accounts?

• Reallocate your education savings to your retirement accounts — your future self will thank you.
• Aim to max out your 401(k) — you can save up to $20,500 in 2022.
• Use leftover funds in your cash flow to strengthen investments or take advantage of unique financial strategies like Roth conversions, realizing long-term capital gains, buying or exercising stock options, and more.

4. Find Generous Ways to Help Your Child Through Graduate School Besides Tuition

Footing the tuition bill is not the only way you can support your child in their education path. There are several ways to offer help that cost less but are still meaningful.