How do I determine if a PhD is financially feasible for me?

Question

I originally posted this in the personal finance stack exchange, but since it hasn't received any responses, I thought I'd try here.

I just turned 38 and am contemplating pursuing an academic career, but I want to weigh the financial risks before making a decision. I graduated from college in 2018 with a general liberal arts degree, though I plan on studying a humanities field in graduate school. (Because I've mentioned a specific situation with a prof. on other stack exchanges, I'm reluctant to reveal the field, as it would identity her.) My education was paid for with financial aid, though I ended up borrowing $25,000 in federal loans for personal expenses (about 10K of this is unsubsidized accumulating interest). Additionally, I have a spotty employment history (minus a stint of self-employment a decade ago, I've never kept a job);thus, I have no retirement savings or financial "safety net." I currently live with and am primarily supported by my mother, and I have no children/dependents.

I'm only at the point of applying for a master's degree, but I want to carefully consider whether this is a viable path for me. First, most graduate assistantships pay poverty level wages. As long as I continue living at home, it's okay, provided that my mother (in her late sixties) remains in decent health (she has medical conditions). However, I would not be able to support myself on that wage if I had to. Alternatively, I could forgo funding and take out more loans for my graduate education, but that would leave me with exorbitant debt.

Next, I would be entering the job market around my late 40's, possibly early fifties. From what I hear, tenure track positions straight out of grad. school are rare, and many newly-minted PhDs end up with part-time adjunct positions or post-docs, neither offering financial security. (I'm also averse to relocating, which limits my options.) Again, I wouldn't be able to build up any savings on the teaching or research assistantship (or I'd have exorbitant debt from loans), so I would be graduating in a precarious financial situation.

Lastly, tenure track positions (particularly in the humanities) are scarce, and there's a chance I could never achieve tenure, even if I completed a PhD. (My reluctance to relocate is an additional obstacle, as it limits my opportunities.)

Money is not my main motive for pursuing this path. I'm passionate about this area of research, and it's a rewarding and challenging career. Additionally, I think academia offers the perfect balance of autonomy and job security (if you're able to get tenure). However, given my financial situation, I'm not sure if it's viable for me financially. For example, as idealistic as it seems now, I'm trying to imagine being in my 50's, close to the age where most people retire, having no savings (and possibly a lot of debt), and being thrown into an uncertain job market.

However, there's nothing else that I think I'd enjoying doing, and there aren't any lucrative options with my degree anyway. Moreover, I'll always regret not even trying to pursue my dream. Thus, I want to ask, from a purely financial perspective, is this a viable path for me?

united-states education career

Edit- There are some financial risks for most people pursuing an academic career. However, a better way to word/ask the question is "How does an individual determine whether these risks are worth it?" For example, is there a point where no matter how passionate and talented someone may be, the risks are too great (i.e. possibly enduring lifelong poverty, never being able to retire etc.)?

Does probability for success factor in (i.e. ending up a tenured professor)? I think I'm too early in the process (haven't even started a master's yet) to determine this. If undergrad. performance is any predictor of future success, I graduated with a 3.93 cumulative GPA and 4.0 in my field (average to light course load), six of those credits being at the graduate level. I didn't decide to pursue graduate school in this field until later in my degree, so I didn't have many research opportunities or any publications. While this isn't the most impressive undergrad. resume, I also don't think it screams "unfit for grad. school."

So, again, how does one determine whether the financial risks are worth pursuing an academic career path? Hopefully my rephrasing of this question will get it reopened.

Edit- While I still haven't decided if/where to attend grad. school, I've decided that finances aren't going to be the deciding factor. The problem is that I'm conflicted between not wanting to relocate and not wanting to attend my alma mater after this ordeal w/ the dept. chair/admin.

Answer 1

Based on your description, getting a Masters degree is not a good idea. Several reasons:

• You can't be sure your mother will remain healthy.
• You currently have no savings, and you're already 38. There's not much time left to build up a retirement fund - and as you point out, academia does not pay well.
• You already have student loans to pay for.
• Getting a job in academia is hard. "There's a chance I could never achieve tenure" is a very calm way to put things; the real odds of you never achieving tenure is probably in the vicinity of 80% in the humanities.

Let's take the rosiest result that you could possibly get by pursuing an academic career. Your mother remains healthy. You are able to fully fund your studies, without incurring extra debt. Your current debt is paused until you finish studying, after which the interest rate is 4%. You finish in 6 years. After graduating you immediately land a tenured professorship paying $60k a year, from which you are able to save $30k a year. You use the savings to first pay down the debt, then invest all of it into the S&P 500, which returns 10% a year (this itself is risky, since you need to save some money for a rainy day, but we are considering the rosiest possible result).

1. Six years from now: you are 44 years old, net worth -$25,000.
2. Seven years from now: you are 45 years old, net worth $4,000.
3. Twenty two years from now: you are 60 years old, net worth $1,065,200.89.

If we further assume that $1 million is enough to retire on in 22 years' time (itself a shaky assumption), then in the rosiest scenario, you are just barely across the finish line.

You could make the model more complicated of course. Perhaps your $60k/year salary will also increase at the rate of inflation (although if taking inflation into account, your expenses would also increase), perhaps you are willing to delay retirement to 65, etc. But the margin of safety you have is tight, even in the rosiest possible scenario. What if your mother falls sick? What if the stock market crashes right as she does? What if you are involved in a car accident and need surgery? What if you can't live on $30k a year (note you have to pay taxes out of this number; further, even if you can, what about your spouse/children)? What if you can't land a tenured position?

tl; dr: don't do it.

Edit: in the more general case, one would modify the model above to take on more realistic assumptions. For example you could say that immediately after graduating, you do a postdoc that only pays $40k a year for 6 years, during which you save $20k a year, before landing a tenured position. This changes your net worth in 8 years' time to $13,760, your net worth in 12 years' time to $122,248.02, and your net worth in 22 years' time to $843,014.89.

Perhaps you decide that when you become a professor, you'll buy your own house for $100k. This further modifies the calculation above to make your net worth in 12 years' time $22,248.02, and your net worth in 22 years' time will be $583,640.65 (+ however much the house is worth).

If you then decide that you will work longer before retiring, your net worth in 27 years' time will be $1,141,427.40. In fact, if you play around with the calculator, you'll find that time really is money. 10% more time beats earning 10% more salary! That's why 23-year olds can follow their hearts while older people must be more conservative if they want to retire comfortably.

You ask further about how to model probability of success in becoming a professor. To do this, search up an alternative career option (preferably several) for people with your intended degree. Next, use your local jobs portal to look for jobs for people with that degree. Finally, check salary websites for how much these jobs earn. Now instead of the $60k/year salary assumed in the calculations above, you put in whatever your new salary is, and rerun the calculations. Remember there's an ~80% chance you never become a tenured professor, so a plan B is important.

If after running all the calculations with realistic assumptions, you find that you can reach the finish line with room to spare (how much margin of safety depends on your risk appetite, but you can always make more pessimistic assumptions and see if you still get there), then a PhD is financially feasible.

Answer 2

Humanities is specifically high risk unfortunately Gemini, so the simple answer is yes, the financial risk is disappointing massive, no matter the yearning. Allure's point about your mother's health raises another important issue, one of mobility and flexibility. In a very scarce and competitive academic environment, extreme flexibility and mobility tends to be the number in order to capitalise the rare opportunities which pop up all over the world. Those opportunities tend to be important building blocks to increase your chances of tenure, something which would likely be very difficult with an unwell parent understandably.

I am gonna be voted down but sorry Gemini, your question is framed as a financial risk question, but you then you minimised the issue of money later on in the piece too. If you are financially secure, it is much easier to establish a career compared to struggling with student loans. However, the inner contradictions in your piece echos the lack of detail around your previous work history or career development. Success in finances can be different from success in academia, and vice versa. Most of the time skills from one can help the other.

My worry is that you may have an idealistic impression of academia and its more secure lifestyle, which may not reflect the tough financial realities, especially in the humanities. Its highly contested and arduous inner workings is usually very invisible the public and most students. So I agree with Buffy, despite the passing mention of "passion and interest", there needs to be more focus on demonstrating that passion and interest. Focus on developing those skills now which can only support your academic endeavours.

So if you can't imagine another career other than academia, then the focus of your work and attention needs to be to broaden those opportunities rather than the Masters and PhD only. Just about every academic have blogged, written, spoke, run a consultancy or developed their opportunities in other ways, rather than in the usual academic journal article/conference sense? The humanities can demand much much more unfortunately, as it has I would argue smaller areas of international and public interest, making it much harder to carve out an academic career.

Everyone here seem very genuine and keen for you to succeed, but I think there is a serious concern that the path is only going to get tougher for you rather than easier.

Answer 3

I would recommend you check out the salaries of humanities faculty at your local state university to see the expected salaries for those who actually land jobs. (Usually available with some clever googling via a newspaper website.) Then try to look at the website of your relevant professional association to see the percentage of PhD graduates who land those types of jobs.

Overall, jobs in the humanities are rare and not well paid. If you are not able to move, you are very unlikely to get a job beyond an adjunct position, which is typically paid below minimum wage.

One additional consideration: individual departments will have different probabilities of placing students in full-time academic (tenure-track) jobs. It would be helpful to look at the recent placement rate of students at your target institution (since you don’t want to move). These may range from 5% in TT roles to 50% at the most elite departments— the department-level variation is very important.

Answer 4

It's tricky to answer this question because you did not clearly state what your actual goal is.

If your goal is to become a tenured professor in the humanities, the truth is that this is an implausible goal for almost everyone. There are very many qualified people and very few universities hiring. There is no reason to think the underlying economic causes of the situation will ever change for the better.

If your goal is to get a PhD, this is something that most people can achieve if they work hard on it for a long time. If you do it, expect short-term financial disadvantage.

If your goal is to have an "academic career" by being an expert in a field of the humanities and publishing frequently, you can achieve that. But do not expect to earn any money at all from it. Have another job.

I think academia offers the perfect balance of autonomy and job security (if you're able to get tenure).

The job security part is a myth. There are no jobs that are secure. Having tenure provides no protection if your university is unable to pay you. It is more secure than many other kinds of employment, but it is not secure.

Answer 5

I think it depends on your backup plan.

As others have pointed out, there is a very high risk that your first choice will not work. You need some other way of supporting yourself, possibly supporting your mother if she needs your help, meeting financial obligations such as repaying student debt, and providing for your retirement through some combination of savings and social security history.

It is difficult to see a backup plan that would instantly get you enough income. Most careers have an initial low earning period. It sounds as though your bachelor's degree is not one that opens up a lot of opportunities immediately, so you may need to get e.g. some certificates before you can start earning much. You need to get past any training, probation, or low earning for inexperience as soon as possible so that you can quickly use the backup plan to earn enough if necessary.

Ideally, you would pursue the master's degree studies and implementing your backup plan in parallel. I have known several people who have completed a master's degree while holding a full time job. If that is not possible in your situation you cannot afford, from where you are now, to start the master's degree immediately. You need to work the backup plan first, if you have to choose.

Answer 6

I do not know, if it is feasible in your field. I do not know, if it is feasible in your country. I also do not know, if you are willing to do it.

Industry, for a while

I have seen such careers multiple times, in Germany, around computer science. You should have a PhD (which is a separate problem tackled below). Basically, people in the management of larger companies are quite well accepted as professors, especially at FHs (the English term is "University of applied sciences", a typical one educates engineers).

So, a PhD and about 10 years at Rolls Royce would probably boost your chances for a tenure – provided you'd still want it then. Also, it's more attractive financially.

PhD, in the industry

Again, in Germany, there is also a chance to get a PhD in the industry. Either with a collaboration project or with a topic interesting to a company or with company's funding at the university.

They are sometimes officially hiring PhD candidates, but the topics are mostly very special and you don't get to choose one. (Again, choosing one's topic completely freely in the academia might not be best for a academic career. Your advisor would probably know better. But I digress.)

Summary

It might be doable, but please consider all the issues in your life and the future outcomes. The benefit of my suggestion is that you'd still have a good paying job, even if getting a professorship fails.