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Quitting Your Job to Pursue Higher Education? Here’s What You Need to Know First

So you’ve finally decided to pursue your masters in Greek mythology or get a PhD in zoology. Good for you. But before you quit your job, you’ve got quite a bit to think about.

While you might dream of adding a “Dr” in front of your name, hope to give your career a leg up or simply be looking forward to reliving your wild partying days, adding up your expenses and doing a cost-benefit analysis might lead to your making very different choices.

Once the full cost of your decision to go back to school hits you, you might decide to check into a university dorm instead of moving into that bachelor pad, pursue your studies on a part-time basis or choose a cheaper institution. You have been warned.

The true cost of your studies

Working out exactly how much you’ll be paying over the course of your studies is not for the faint of heart. That’s why many of us try to fool ourselves. If your course costs $20,000 a year, it’s tempting to think that it’s less than your yearly salary at your current job.

But $20,000 a year really isn’t a small amount when you multiply it over the number of years it will take you to finish your course, assuming you’re not receiving a scholarship or grant of any sort. Two years of studies will cost you $40,000.

You’ll also need to factor in the cost of living. In a best-case scenario (for your finances anyway) you’ll remain in Singapore and continue living with your parents or spouse.

Still, unless you’re planning to subsist on nothing but love and oxygen, you’ll still need to add up the cost of keeping yourself alive over the next few years. That includes, food, phone bills and transportation costs. Even if you’re living like a monk, you’ll probably need at least $500 in this area.

If you’re going overseas, this amount will balloon considerably to include airfare and rent. Unless you’re studying at Chulalongkorn University in Thailand or the National University of Laos, your living expenses are likely to be significantly higher than they are in Singapore, where you might have accommodation to fall back on.

In addition, unless you’re guaranteed employment upon graduation, you’ll want to factor in a period of joblessness as well, just to be safe.

Assuming you undertake a two-year master’s degree course that costs $20,000 a year and you estimate your living expenses to be $10,000 a year, you’ll be spending $60,000 if you find a job immediately after graduation.

The opportunity cost of furthering your studies

The true opportunity cost of quitting your job for further studies isn’t just your tuition fees and living expenses. It’s all of that, PLUS the money you forgo since you’re not working. Yup, that’s how much you’ll be giving up.

In the above example, if you earn $3,000 a month, you’ll be forgoing two years of salary, which adds up to a whopping $72,000. That means your total opportunity cost will be at least $72,000 (salary foregone) + $60,000 (tuition fees and living expenses) = $132,000, plus interest on any education loan you have to take up to pay for it all.

On the other hand, getting a masters degree could well lead to an increase in salary when you reenter the workforce that may or may not make it worthwhile. If you’re a research assistant who wants to make it as a professor, increased earnings might very well end up paying for your education somewhere down the road.

However, if you’re just going back to school to avoid reality, you might end up paying for it by having to slave away for a longer time before you get to retire.

Lowering the cost of your education

So you’ve done the math, and the figures have almost given you a stroke. But you’re not ready to give up the dream just yet. The good news is that there are a couple of things you can do to lower the cost of your education.

If you’re going to be studying in Singapore, some institutions like SIM University offer part-time courses, so you won’t have to give up your income altogether.

If you’re going overseas, picking a city with a cheaper cost of living and a less reputable university can often lower costs considerably.

For instance, an MBA at the University of Melbourne costs 79,645 AUD, while at the University of Wollongong the same course costs 45,000 AUD. At the same time, living costs are quite a bit lower in Wollongong than in Melbourne.

Lowering your living costs

The stereotypical foreign grad student usually lives in a shoebox with five other flatmates and occasionally dumpster dives.

On the other hand, Singaporean grad students who go overseas to study often live rather more glamorous lifestyles, being funded by mum and dad. If that doesn’t sound like you, you should probably find ways and means to lower your living costs.

For those who are headed overseas, rent is going to your biggest expense. And as everyone who’s ever lived on their own knows, sharing with flatmates can make a huge difference to how much you have to pay.

Find out which areas are cheaper than others and still won’t cost you a fortune in transport fees. A bicycle can be a godsend.

Increasing your income

It can be hard to go from getting a grown up’s salary to being penniless and having to live off your savings. While your undergraduate counterparts are partying it up, you might want to get a part-time job instead.

If you’re continuing your studies in Singapore, you might want to ask your current company if you can work for them on a part-time basis. Since you’re already armed with a bachelor’s degree, you might have better luck brokering a flexible arrangement. Otherwise, giving tuition is probably your best bet.

On the other hand, if you’re studying overseas in a developed country, chances are high that you can earn a decent wage doing regular part-time work in retail or F&B, so even if you don’t get a cushy internship or office job, you won’t go hungry. As a student in Melbourne, I used to earn 18 AUD (19.42 SGD) an hour typing up documents for a 65-year-old man in his home, which wasn’t too shabby.

Assess your loan options

Unless you’ve saved up a ton of money over the course of your working life, you’re probably going to have to take out a loan to finance at least part of your studies.

The thing to remember is that some loans are more expensive than others, and interest rates are constantly changing, so you’ll need to do your own research. MoneySmart’s education loan tool lets you compare the interest rates of various banks.

This story was first published on Money Smart.

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