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Nancy Palmieri—AP

You might think graduate degrees are more necessary than ever in today’s hyper-competitive job market. But a recent report suggests that post-grad education often comes with a very big catch: crippling debt.

The New America analysis found that America’s trillion-dollar student debt problem is disproportionately owed to graduate and professional degrees, not undergraduate educations. About 40% of federal loan dollars go to grad students, even though post-baccalaureates make up only 20% of higher-ed students.

"A lot of people go back to school because they don’t know what else to do and want to get out of a tough job market,” says former hiring manager Alison Green, author of But you should be more conscious about your decision-making, she adds. This is not only because a grad degree can leave you with a six-figure debt, but also because pursuing an advanced degree takes you out of the workforce and doesn’t always lead to better job prospects.

So how do you decide whether a grad degree will be worth it for you? Here are three questions to ask before applying:

1. Will I realistically be able to pay off my debt? If you’re going to law or medical school, and intend to practice, you’re in a decent position to eventually pay off your student loans. “But if you are thinking of getting a masters degree in liberal arts, you should carefully scrutinize the cost,” says Green. In 2004, the median debt for an MA was $38,000, but in 2012, it was $59,000 (inflation-adjusted). Look into average starting salaries for your desired field before you apply. Then plug in your numbers using this LearnVest calculator.

2. Do I have clear goals—and a backup plan? Going to graduate school simply because of a lack of a better idea can be a dangerous move, especially if you’re just putting off the big question of “What am I going to do with my life?” until you are a few years older (and a few hundred grand poorer). You should know why you’re getting your degree and what you’ll do if your Plan A doesn’t pan out. And consider whether your degree will make sense for both your primary and contingency plans. A common problem for law students, for example, is realizing soon after graduation that they don’t want to practice law—and discovering their degree can actually make them seem overqualified for positions in other fields, Green says.

3. Is a grad degree valued in your desired field? If you want become a software programmer, you don’t need to go to MIT to learn coding. Between MOOCs and online resources like, there are many options for learning the same skills more cheaply—while you keep your day job. In fact, in some fields, leaving the workforce for a year or three might actually hurt you when it comes time to job hunt. “Hiring managers increasingly place a higher premium on professional experiences than academic credentials,” says Green. “That’s especially true in technical areas like programming, software development, and IT.” So consider whether your intended field really values post-graduate education—or if an apprenticeship or alternative training program could give you the same pay bump. A recent Georgetown University report shows that a graduate degree does not boost incomes uniformly: If you are a biology or life sciences concentrator, your income could jump more than 100%, but in the arts, you’d get only a 23% boost. Finally, if you are really serious about locking down a diploma, consider pursuing a degree part time while continuing to work. That keeps your resume uninterrupted and your income flowing.