Why I Chose Starting a Business Over Grad School: Part 1 : Under30CEO Why I Chose Starting a Business Over Grad School: Part 1 : Under30CEO
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Why I Chose Starting a Business Over Grad School: Part 1

| March 1, 2012 | 17 Comments

This part one of a three part series where I discuss the reasoning why I chose to start a business rather than pursue graduate school.

I graduated high school and went to college, getting a degree in economics and mathematics. I’m not a radical and I hate risk. So why in the world would I start a business when my friends were going to graduate school?

I’ve always been blessed to be comfortable understanding money. I’m good at conceptualizing it and thinking of the implications. And that’s where my first stumbling block arose. Because there is no way around it: graduate school is expensive. Tuition and living expenses can easily push over $50,000 per year, and a grad school program will be two years in the case of most masters programs, and longer in the case of law degrees and programs.

So you come out of school with $100,000 in loans. Is that the end of the money story? Not so fast. Remember, you used to be doing something else. In my case, I was working a solid job that was paying me around median wage. The cost of going to school includes all these lost wages, too (Economists call this opportunity cost). So now the total cost of grad school comes in the neighborhood of $200,000.

There can be different goals of going to grad school. You may want to change career paths, make more money, or you might just like school. But most people want to come out making more money. How long would it be before you’ve come out ahead of where you would have been had you kept working your job?

Using data from a Georgetown University employment study we can get a handle on average wages for recent grads, experienced grads, and holders of graduate degrees. Let’s just pluck some values that look to be about in the middle. Obviously, in real life, engineering is more lucrative than education.

Years after graduation 0 2 5 10 15
Job ($50k/yr) $100,000 $200,000 $350,000 $600,000 $850,000
Grad School Job ($75k/yr) -$100,000 $50,000 $275,000 $650,000 $1,025,000

(This table intentionally leaves out any investments, discount rates and raises purely for simplicity. If any discounting is taken into effect, it would make graduate school look worse.

We can momentarily assume that periodic raises are given equally, but the ceiling may be higher for those with graduate degrees.)

The table shows that, using an average scenario, it would take about 10 years before you get back to where you were–strictly monetarily. In other words, you would have been richer for a full 10 years after grad school had you not gone. After 10 years, you start getting the monetary benefits of your degree.

Importantly, even given the tremendous cost of education, it should be considered a thirty year investment. If you get a graduate degree at twenty-five years old, you break even at thirty-five, and you come out way ahead by the time you start getting toward retirement at fifty-five or sixty. I don’t want to pretend that’s not true.

What I want to do is to think about the cost of graduate school and think about what else I might do with that money. Rather than go to grad school, is there anything else more compelling to do with $170,000? Quentin Tarantino famously said that people should not go to film school. They should take the money that the would have spent on tuition and make a film.

When I looked at the investment necessary to go to graduate school, I saw a greater opportunity, and that was to start a business.

In part two I will talk about my second reason: why should I pay so much to learn?

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  • http://www.TheSuccessEducator.biz/ Debbie Ruston

    Marc brings up an excellent point….why has society bought into the belief that it is acceptable to spend this amount of time and money to “buy a job” and build someone elses dream?  

    Those that invest the time and capital into a business will always come out further ahead and create self sufficient opportunities for themselves.  This is security…the security you create for yourself.  Society must stop buying into the belief that security comes from having a “degree” and working for a corporation.

  • Prax

    gud article Marc…

    correct reply Debbie… even i hav made d same mistaken f spending 4 valuable years paying a lot of money & with d same degree working for an organization which pays me very less ..

    P.s: according to marc, i wud get my investment money on my degree after 6 long years.. i cud hav  done something instead. well, planning to do something now..

    eager to read the second article marc

  • http://twitter.com/nuancechaser Steph Lee

    Hey Marc,
    Aas a senior about to launch out of college into the ‘real world’, I appreciate your article greatly. I do however plan to attend grad school one day. This has been a recent decision and I just wanted to share my thoughts. 

    My undergraduate career was very unsatisfying from an intellectual point of view. I found many of my peers unprepared for the rigor of questioning, exploring their curiosity, or even just cultivating an open worldview. If you asked me 3 years ago if I would go to grad school I’d dismiss the idea in a heartbeat. 

    I’ve always had 2 jobs while going to school and somehow got involved with startups in Boulder Colorado where I live; this stint in the entrepreneurial community has honestly been by far some of the most rewarding experiences I’ve ever had. My network and life is richer because of them. 

    While I’m immensely grateful for the mentorship and opportunities I’ve received, I want to go back to grad school at some point because I’ve missed out a rigorous academic learning experience, one that undergrad was really for. It took me 4 years to realize this but the freedom of going to college is irreplaceable. Going to college/grad school should (emphasize:should!!!) be your time to learn about yourself and your uttermost potential. 

    Personally, I think it is really valuable to have this amount time devoted solely to learning anything and everything that you want to do. I wish I didn’t have to work while going to school, I wish I got to learn and go to all the guest speakers and participate in all those awesome events with academics and professionals that I might never have a chance to meet after uni. That is what universities should be; they are here to provide a safe place to learn, to explore, to bounce back up, and dedicate those 4 years to just the pleasure of learning. The expense of universities have made that largely impossible. 

    When I go back to grad school and there’s only one grad school I have in mind and only this one program (yes I’m incredibly set on it!), I want to make sure this time that I’m in a comfortable financial position and have gained enough life experience and humility to cherish this privilege. It is such a privilege to go to the university just learn, experiment, pick up new skills, debate, challenge, analyze, comment, and engage in true creative collaboration. One might argue that startups are doing this, that entrepreneurs are already doing this for themselves and I agree wholeheartedly, 120%. Universities are not the only place where this is happening; for the most part this learning experience is diminishing. But we shouldn’t discount grad schools as tremendous learning opportunities and spaces too. If it’s anything, it’s really the cost of academic education and how they’re trying to rebrand themselves now that’s really dampening a student’s motivation to learn. 

    Just wanted to share. PS: I’m a dance major and I want to pursue my masters in economics and PhD in performance studies one day :)  

  • http://twitter.com/nuancechaser Steph Lee

    Just wanted to clarify: My strong response is not because I’m disagreeing with you. I’m agreeing with you on that universities are an extremely expensive investment and I think many parents should take this into account before sending their kids to school. My parents are extremely encouraging of me starting my own business BUT I still really really want to go grad school one day.

  • http://getbrode.com Marc Brodeur

    Thanks, Steph. I love learning, always have and I never stop. In fact, I try to take 1 continuing ed class every semester if I can. To me, it comes down to: what’s the best, most efficient way to learn? I get into that a bit more in part 2, hopefully will explain a bit further where I’m coming from.

  • http://getbrode.com Marc Brodeur

    Thanks, Steph. I love learning, always have and I never stop. In fact, I try to take 1 continuing ed class every semester if I can. To me, it comes down to: what’s the best, most efficient way to learn? I get into that a bit more in part 2, hopefully will explain a bit further where I’m coming from.

  • http://getbrode.com Marc Brodeur

    Thanks, Steph. I love learning, always have and I never stop. In fact, I try to take 1 continuing ed class every semester if I can. To me, it comes down to: what’s the best, most efficient way to learn? I get into that a bit more in part 2, hopefully will explain a bit further where I’m coming from.

  • http://livinganawesomelife.com/ Sacha Chua

    Good for you, Steph! =)

    Graduate school was a totally different experience compared to undergraduate studies. Independent research was scary, but worth it, and it was great being surrounded by all these incredibly smart people who were there because they wanted to be. It was good to have two years focused on something I wanted to study. I transitioned from graduate school into a great job that built on my research. Now, with the savings from that job, and the network I’ve built, and the professional skills I’ve developed, I’m much more ready for entrepreneurship than I was when I started.

    I was lucky to do all of that on with funding (scholarships + assistantships = no debt and even some savings afterwards, yay). Don’t forget to apply for funding wherever you can.

    What you get out of school depends on what you put into it. Business is like that, too.

  • http://revplace.com/ Aaron Wright

    Whenever I hear people talking about going to school to get qualified for some job, I remember what Richard Branson said in his book “Losing My Virginity”. His girlfriend was talking about going to school to become an architect, and Branson said something along the lines of “You don’t need to go to school to design buildings. Just go do it.” I think he was absolutely right. School is overrated. Unless you need special certification, such as to become a doctor or lawyer, you don’t need a college degree to do it. Just go do it.

  • http://www.savvyscot.com/ Savvy Scot

    This is a prime example of why University/College cannot be the future of learning…

  • Bojensen

    Come on!!! so you would live in a building that was build by someone with no schooling in it at all??? :)

  • http://twitter.com/WrightAaronM Aaron Wright

    For starters, most buildings throughout history were built by people with their own two hands, and “no schooling”. But more broadly speaking, outside of just architecture, I think you are assuming that “no schooling” means “no education”. A lot of amazingly successful people have little formal schooling, but are obviously very intelligent. I won’t regurgitate the usual list of suspects, but you can Google it. My point is that you don’t need formal education to get an education.

  • Pingback: 4 Reasons to Go to Grad School: An Addendum

  • Chantalle

    I think we need to think of education in different terms. It is an enriching experience that brightens your worldview, acquaints you with thinkers of history and new schools of thought, introduces you to new people, and is golden networking time. If you’re thinking of college solely as a financial investment, you’re not appreciating its true value.

  • http://getbrode.com/ Marc Brodeur

    I think it is important to distinguish between a liberal arts education–which has just the value that you say–and professional education. In many cases, someone can get a great professional education for much less than $150K+ that school can cost. School certainly has value. I’m making an argument based on choice and opportunity cost.

  • Ciera

    Marc, great article. I think most of us who have the entrepreneur spirt find ourself crossing this path one time or another in our life. I believe in self education. If I want to start a business I am not going to run myself in debt learning from teachers who most of the time never started a business themselves.

    Check out my blog for more about this topic

    http://www.cierasanders.blogspot.com

  • Stefany

    “Society must stop buying into the belief that security comes from having a “degree” and working for a corporation.” LOVE THIS.