There are millions of reasons why you might want to add letters after your name after your college graduation. Maybe the thought of leaving the cozy halls of academia causes hyperventilation. Maybe you dream of opening your own pediatric practice. Or maybe the pay scale at your company cranks up with each additional credit earned.

Though these may be fine sources of motivation, experts warn it is wise to pursue a higher degree only after fully investigating the economic realities -- lest you find yourself being reminded of them by a loan officer.

What do I want to do for 40 years?

"The question to ask yourself is, 'Is grad school a notch in my lipstick case towards where I want to go?' Because if not, it is just a holding pattern," says Laura Berman Fortgang, author of "Now What? 90 Days to a New Life Direction." Fortgang frequently hears from people in their 20s who checked into grad school because they lacked direction, only to be disappointed when they left a few years later with a degree and mounds of debt and still no direction.

More than 70% of those who pursue a graduate degree find themselves saddled with debt that they may not be able to afford, according to the U.S. Department of Education's 2004 National Postsecondary Student Aid Study. On average, a person with a master's degree graduates with a combined undergrad and graduate debt of $32,858. For an MBA that figure is $41,687; for a Ph.D., plan on $53,405; and for a law degree, expect to be paying off $80,754.

The good news is that, on average, people with graduate degrees make more money than those without. According to the most recent U.S. Census figures, a person with a professional degree (law, medicine, business) will make, on average, $4.4 million over their lifetime, in today's dollars. That's more than twice the $2.1 million a person with a bachelor's can expect to earn. Even a master's degree will bring, on average, $2.5 million over your working life; a Ph.D. will pull in $3.4 million over the average career span of 40 years.

In a nutshell: A paralegal makes a median annual income of $34,707, while a beginning lawyer can expect $57,173, as of June 2008, according to PayScale.com.

But the grad-school-payoff potential can vary widely by chosen field -- and a master's in French literature isn't going to bring the same bang as an MBA.

At JPMorgan Chase in New York, associates in investment banking are required to have MBAs and earn around $125,000, plus five-figure bonuses, says Rob Sivitilli, the group's managing director. Their contemporaries in finance positions don't need graduate degrees -- but they only make about half as much.

Some jobs require an MBA

"Not everyone (in business) needs an MBA -- my dad was a successful entrepreneur without an MBA," Sivitilli says. "But as the world gets more sophisticated and financial products become very complex, a lot can be gained through classroom study."

What an MBA did for me

It's not just the classroom time that Wall Street banks are paying top dollar for. By recruiting from top graduate business schools -- whose rigorous admissions standards screen out all but the top performers -- Wall Street employers get members of a ready-made network of high achievers likely to rise together.

"It is amazing how all those contacts you met at business school become important people you do business with in the future," Sivitilli says.

On the other hand, grad-school networking doesn't offer as much to employers in the humanities, says Thomas H. Benton -- a pseudonym for a humanities professor who occasionally writes for The Chronicle of Higher Education on careers in the humanities.

Benton suggests that a graduate degree in the humanities is fine "if you're independently wealthy and don't care about getting training in something with no market value." But he points out that the job market for tenure-track academic positions in the humanities has been on the decline for decades, and that universities with openings increasingly rely on adjunct professors -- part-time employees who get little or no benefits and make a fraction of the income of a full professor.

Audio: A professor's unique perspective

Don't believe it? The number of university teaching jobs posted for English and foreign languages fell 21% to 3,108 positions between 1988 and 2004, while the number of people graduating with doctorates in those fields rose 114% to 2,452 over the same period, according to the Modern Language Association.

Further, degrees in literature, history, language and the arts prepare students for little beyond teaching, Benton says.

"Some people manage to build careers in journalism and writing, but one has to expect some hungry years with little guarantee of success at the end," he says. "Students are so enamored of their subjects they go into this somewhat blind. The schools want students to come and pay tuition. It's kind of a pyramid scheme."

Even JPMorgan Chase's Sivitilli warns that simply graduating from a top school isn't enough to justify the investment of an MBA -- in part because top programs often leave graduates with six-figure loans.

"An MBA requires substantial commitment of time, energy and financial capital," he says. "To make that tradeoff worth it, you have to be knowledgeable about what you want to do with that MBA."

In the end, most people find that for a graduate degree to make sense, it needs to have a payoff that's intellectual and emotional as well as financial.

But wait, what degree should I get?

Josh Robach, 30, found his opportunities disappointing after spending five years earning a Ph.D. -- despite a full fellowship and stipend at the No. 2-ranked school for the highly compensated field of materials engineering.

Before committing to grad school, Robach had listened to the program's brags about 90% placement rates, six-figure salaries and alumni who went on to become Nobel laureates and CEOs. But he found it surprisingly difficult to find work in the Chicago area, where he and his new wife planned to settle down. Those high-paying jobs were no empty sales pitch, Robach says -- they did exist in some areas of the country. It just so happened Illinois was not one of those areas, however.

"You sign away your life for five years and work your tail off," Robach says. "By the time I finished grad school I still had undergrad debt, while my friends had earned a quarter-million dollars in those five years."

Robach dabbled in academics, but was disillusioned to find accomplished Ph.Ds from top programs toiling for $25,000 to $40,000 per year, with little hope for tenure and no experience applicable to industry jobs. He eventually landed a position in his field and today works as a materials engineer, making about $65,000 -- $35,000 less than he had expected.

But Robach does not regret his graduate school experience.

"It was a worthwhile investment because I feel more prepared to weather the ups and downs in the job market," he says. "That Ph.D. does show employers that you can solve problems, finish what you start and use the latest tools to contribute useful and original ideas to advance the success of the company. Whether or not a company is willing to provide enough compensation to attract such a person is a different issue."

Published June 25, 2008