Is a PhD a good investment? A cost-benefit analysis

Today’s guest post is by NeuroPostDoc. NeuroPostDoc is a recent Ph.D. moving cross-country to continue her research on human cognition using neuroimaging. She previously wrote about teaching while dissertating for TSW.

Much handwringing has occurred recently on the topic of compensation in academia, in particular for graduate students whose stipends are legendarily meager. Often this discussion fractionates into two equally histrionic sides: “underpayment of graduate students is a grievous undervaluing of intellectual labor,” versus “grad students who complain about stipends are entitled whiners who should have known what they were getting into.” While I was writing my dissertation I vacillated wildly between these two views (and all the more moderate ones in between) on a near-daily basis, and concluded that nearly all of it is a matter of perspective. But since the extremes are illustrative, here I will argue both sides and let the reader decide which account speaks more to them.

1. Underpayment of graduate students is a grievous undervaluing of intellectual labor

I recently found my W2 from my first full time research job, as a research assistant for a small lab in a medium sized city in 2007. I compared it against my W2 as a teaching assistant in my fourth year of my doctoral program in 2014, and found (not shockingly) that I actually made more money in 2007 in an entry level job with a B.A. (approx. $27,500) than I did as a TA with an M.A. and 3 years experience teaching college courses  (approx $26,500). Both jobs provided similar benefits, e.g. the same health insurance at a similar low cost. The main difference is that as an RA, I received a small annual bonus ($500-1000), annual cost of living increases, and most importantly opportunity for advancement. By the time I left that job for grad school 3 years later, my salary was closer to $33,000 thanks to a promotion to Senior Research Assistant. I estimate that if I had continued on to becoming a lab or department manager, or project director, I could have been earning in the range of $40-50,000 for the last several years instead of receiving a wage that stagnated below $30k. Here is a breakdown of what I earned as a graduate student each year, versus my estimate of what I could have earned with a B.A. working in research, conservatively assuming modest COL raises and no major promotions as an RA:

Year Graduate Stipend RA Salary Difference
2010 18,000 34,000 16,000
2011 25,000 36,000 11,000
2012 25,500 37,000 11,500
2013 26,000 38,000 12,000
2014 26,500 39,000 12,500
2015 27,000 40,000 13,000
TOTAL: 148,000 221,000 76,000


Ouch: $76,000 in lost income!  That is more than enough for a house downpayment with no mortgage insurance, or buying a small apartment in cash. Or the cost of childcare for several years. Or a year (or more) backpacking through Europe. Or a very fancy sportscar. Or a backyard zoo of exotic animals. You get the idea.

Now, I admit this is a very oversimplified model, but arguably this estimate is actually *better* than the reality, for several reasons: the cost of living in the city where I was an RA was lower than where I lived during grad school, so my grad school dollars didn’t actually go as far. These estimates also assume modest COL raises as an RA, when in all likelihood 5 years would have been long enough to earn an M.A. (paid for by my employer at 1-2 classes a semester over 5 years), which would have gotten me a raise and likely promotion. So in reality I probably missed out on well over $100K in income by going to grad school. This is not even considering the possibility of working in industry, which would have raised my earning potential enough that I could have earned an additional $200k easily over 5 years.  Thus I conclude: underpayment of graduate students is a grievous undervaluing of intellectual labor.

2. Grad students that complain about stipends are entitled whiners who should have known what they were getting into

It’s no secret that doing a Ph.D. is not the ticket to the big bucks. I could have created the chart above as part of my decision process when applying for graduate school (in fact that’s a pretty good exercise for anyone thinking of doing so). Stipend amounts are usually published on university web sites, and the large public university where I attended grad school actually publishes all employee salaries publically. Anyone smart enough to get into a Ph.D. program should be savvy enough to know what the financial costs will be.

The other glaring oversight of my simple chart above is that it doesn’t represent my full financial aid package. The stipend is just half the equation – tuition reimbursement is just as important. My tuition costs fluctuated based on course load, from maybe $2,500 a year once I was done with classes and only doing research credits, to $23,000 or so the year I took lots of classes (4/semester) while fulfilling requirements. There is also summer funding from my advisor’s grant ($3,500), conference travel grants provided by the graduate school and my department(~$4,000 over 5 years), research funding to conduct my studies (~$10,000 also from my advisor’s grant), and miscellaneous money from winning departmental awards. All told, here is my estimate of my total financial aid:

Year Graduate Stipend Tuition Other funding Other funding source
2010 18,000 23,000 3,500 summer salary from grant
2011 25,000 23,000 1,000 travel funding
2012 25,500 15,000 5,500 travel funding +research grant
2013 26,000 3,000 n/a n/a
2014 26,500 2,500 $2,000 travel funding +research grant
2015 27,000 2,500 $6,000 travel, research, + award money
TOTAL: 148,000 69,000 $18,000 GRAND TOTAL: 87,000


So: $87,000 in financial aid – not too shabby! That’s more than the earned income I lost out on by not working as an RA. And when you consider that many adjuncts make less than I did as a TA for teaching far more classes, it really is a cushy situation – getting paid a living wage (most years), with good health insurance, to teach one class a week and mostly research my greatest passion – it’s a dream come true, and grad students that complain about stipends are entitled whiners who should have known what they were getting into.  Ok, so obviously this isn’t the whole story. My actual views (6 months post Ph.D.) are more like this:

3. All of the above is at least partially true, but neither tells the whole story

First I’d like to address a question I’ve heard from a few administrators tired of grad student complaints – why choose to go to grad school (knowing the compensation, or lack thereof) and then complain about it later?

Well, one reason is hidden or unexpected costs – for example my first year stipend of $18,000 had to cover student fees, health insurance, and textbooks, which ran me nearly $3,000, leaving me with a just-above-poverty-level $15,000 to work with.* Thankfully my husband and family provided support, I had some savings from my RA job I could dip into, and I was able to get a modest amount of summer funding,  so realistically I lived off closer to $22,000 that year (still not a lot).

There is also the cost of medical bills if a student is injured or has a chronic illness, compounded if the health insurance provided is bare bones. There is the (astronomical) cost of child care if a student starts a family. There are car repairs, unexpected plane flights to visit dying relatives, pets that get sick and require costly operations. Any or all of these can reduce a $25,000 stipend to a poverty level $15,000 very quickly.

Next, I’d like to point out re: #2 that I never saw nearly $70k of my financial aid money as it went straight back to the school for tuition. Of the $18,000 in other funding, the vast majority went towards paying for research costs, conference travel, or supplementing my low first-year stipend. I did win $500 as a prize from my department which I used to go away for a weekend with my husband to somewhere we probably found through Groupon.

Another consideration re: #1, given the unpredictable funding climate, it is also not fair to assume I would have seamlessly continued my research career with regular COL increases. In fact, the lab I worked in prior to grad school disbanded about a year after I left when the PI was offered a tenured position in another state. I might have been able to job hop, but I could have ended up unemployed and losing income that way.

And finally, The Intangibles: if I was still an RA, even a senior RA or Project Director, I would be running other people’s research instead of my own. Same goes for the mythical high paying Big Pharma job, which I presume would feel even less aligned with my interests. As a graduate student, I not only got to pursue my own research ideas but I was given funding to do so, with the only expectation being that I would publish a reasonable amount and make my advisor and department look good. I held up my end, by publishing in the top journal in my subfield (which won me the department prize) and getting a post-doc at a prestigious top 10 major research institution. For the $18,000 my school invested in helping me travel to conferences and conduct research, I certainly think they got a reasonable return on their investment. That said, if I had worked equally hard for an employer who spent $18,000 on training and equipment so I could excel at my job, likely the financial benefits for them (e.g. successful drug trials) and me (performance bonuses) would have been far greater.

However, in terms of personal satisfaction – waking up in the morning and realizing my job is to research the human brain, feeling like what I’m doing contributes to scientific progress (even just in tiny increments), having the freedom to set my own schedule, agenda, and goals – academia wins by a landslide. It helps that I am a person that is good with tight budgets and values experiences over possessions or wealth. It also helps to have a husband who can jointly contribute to living expenses, and a family that understands the financial sacrifice of graduate school and pitches in when things get tight. I can’t claim that my cost-benefit analysis has any direct value to others, but hopefully I’ve provided a framework for potential graduate school applicants to weigh their options and decide what’s best for them.

*After all the first year students brought concerns over the funding level to the department, they agreed to cover student fees going forward as well as raise the stipend amount to around $22,000 by splitting the fellowship funds into fewer funding lines. But some departments have no shame about paying their grad students poverty wages.



8 thoughts on “Is a PhD a good investment? A cost-benefit analysis

  1. My general, overall comments are (1) that “no knowledge is ever wasted”, and that if people have the curiosity and ability and opportunity to continue to learn and study and (particularly) continue with something they are passionate about, then this is always A. Good. Thing; and (2) that a PhD, like nothing else, enables you to work out for yourself how to solve problems and “own” the solution you come up with. This is a valuable thing to learn; with a PhD, you learn it – no-one teaches it to you. Whether you continue to solve problems in the same field or in a different field, it is something you, personally, can contribute to the benefit of society and it is also A. Good. Thing.

    It is a privilege to be able to do a PhD (with all the multitude of considerations), but it is not the only pathway to research and/or success in other areas, and everyone has to work if it is for them, and consider whether the benefits are worth the financial and personal costs to themselves. No-one can decide this for them. Good luck and good management to all of you who are following this pathway.

  2. Thank you for this post. I’m an Nth-year grad student and found that your second-to-last paragraph really spoke to me—although perhaps not the way you expected. Money has never been a serious issue for me; I get paid non-terribly as a science PhD student, my husband provides a second income, and I am a master of budgets. However, I don’t like it. I don’t get that personal satisfaction out of it. I’ve been really struggling with the idea that that’s a perfectly acceptable reason to leave academia after I graduate. Something about the way you put it—about how the low pay and such are sacrifices to be made for that satisfaction—helped me grapple with that.

    • crazy grad mama, I am glad you are working out what suits you – it is perfectly OK not to continue with research, it doesn’t suit everyone. What you have done in your PhD is valuable, never “wasted” – you will be a more valuable contributor to whatever you go on to do next. All the best, and well done for persevering (and learning more about yourself along the way).

  3. It’s great that you provided your real numbers here so prospective students can see one person’s experience of how this all shakes out. Graduate student stipends can vary by about a factor of 2, though so can cost of living (at least) and your earning prospects outside of graduate school. But to add one more thing to the ‘real world job’ column, many employers also provide matching contributions to some sort of retirement account (401K), which is always better to start earlier, and there can be huge long-term impacts. I don’t know of any graduate programs that have this type of benefit, though perhaps there are some.

  4. I went the Ph.D. route; my younger sister went straight to industry after her bachelor’s (both in STEM fields). Her starting salary at age 22 was nearly as much as what new assistant professors in my field got paid at our state’s flagship university. My postdoc salary increase was a nice bump, but my sister received promotions during that time, too, so her salary’s still been ~50% higher than mine.

    In addition, she had 401K employer match benefits, was paid extra for every hour she worked over 40 hrs/week, had 12 weeks maternity leave, most of it paid (and the flexibility to take a bit more unpaid if she’d wanted it), and her salary counted towards her social security disability & retirement benefits. Her money also went further because she lived in a relatively low cost city.

    In contrast, grad students don’t have access to institutional retirement accounts with tax benefits. Because they do not pay social security tax, they’re ineligible for disability benefits if they become injured or sick, nor do they accrue future retirement benefits. (A short-term gain, but long-term loss.) Only as a postdoc can one get access to a 403b (but still no employer match) and start accruing credit towards social security disability & retirement benefits.

    There’s just no competition financially. The gap between my sister was big from the start, and it’s just going to keep increasing as her early savings & employer match start reaping the benefit of compound interest.

    My sister also finds her job intellectually challenging, sees the impact of her work on a daily basis, has ownership over the projects she leads, is being groomed for better promotions, and has her evenings and weekends free for rec sports and other hobbies.

    Personally, I think people shouldn’t get a Ph.D. unless they absolutely need one to pursue the work they want to do.

  5. “Personally, I think people shouldn’t get a Ph.D. unless they absolutely need one to pursue the work they want to do.”

    I couldn’t agree more.

    And to d: “no knowledge is ever wasted”:”

    Most employers subsidize classes for their employees. Not to mention that you can keep learning on the job without the financial sacrifices that a PhD entails.

    • I was more thinking about people who had done a PhD and were wondering what to do next, and decide not to go on with academia. I think we are all making the same point here. Your comment only reinforces mine, that no knowledge is ever wasted.

  6. The point that is missing here is that academic institutions consider graduate students as .5 FTE employees because they are also enrolled in coursework. In theory, graduate students should only be working 20 hrs/wk towards their GA/TA positions, but of course the reality is that nobody would graduate at that rate. At our university, funded graduate students now even have to turn in time sheets that show a load of 20 hrs/wk because of the Affordable Care Act.

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