Quitting Grad School Was A Great Financial Decision

Justin at Root of Good had a great post recently on why dropping out of grad school was a great decision for him. In reading his post, I reflected on the decision I made almost ten years ago to do the exact same thing – quit grad school, though under very different circumstances than Justin.

I’m going to put this out there from the start – I didn’t quit grad school for any financial reasons. There were multiple reasons why I quit, and not a single one of them had to do with money. But to this day, I believe it was one of the best financial decisions I’ve made – right up there with marrying Mr PoP despite the fact that he was earning minimum wage at the time.

Ten Years Ago…

I was fresh out of undergrad and living the Type-A American Dream. I had completed my undergrad degree and was enrolled and ready to start a STEM PhD program at a prestigious university in just a few short weeks.

My parents were so proud. Their daughter was not only going to get a PhD from a “name brand” university, but she was getting paid to attend! Tuition and a living stipend to cover all her living expenses! Talk about the parental bragging rights.

I wasn’t quite as enthusiastic as my parents, but was on board with my path that fall of 2005. Talking to new friends – the only other female students entering the program with me that year – the week before classes, I admitted that I wasn’t entirely sold on the idea of a PhD.

“I’m not really planning on working in academia*. Really, I liked the job where I interned as an undergrad. I have a job offer there, but there’s a big jump in the payscale between having a bachelor’s and having a masters. The jump is smaller from master’s to PhD, so I’m not sure it’d be worth it to stay and get a PhD. But since we’re all fully funded, I’ve got a low opportunity cost for the next couple of years, so I may as well get my masters while I figure out what I want to do.”

My new friends, well educated in the principles of optimization (we were all STEM people, after all!), understood my reasoning, even if they all professed to want the PhD for one reason or another and were “all-in” themselves.

A few days later, though our reasons all differed, we had all officially begun our PhD track program.

Here’s what I learned in my first semester of grad school:

  • Don’t get mononucleosis right before starting a challenging new program, especially not if you’re one of those lucky folks for whom the fatigue can last for months and months.
  • Don’t count on the supportive network of people that recruited you being around when you actually enroll. They may have all elected to take sabbatical your first semester.
  • Academia is far from immune from misogyny. (It remains the worst environment I have ever been in when it comes to gender bias.)
  • Academic hazing is REAL**. And brutal.

By the end of my first semester, I woke Mr PoP in the middle of the night by crying in my sleep. “Help! Stop! It’s eating my soul!!” The next morning he asked what I was dreaming about, and I told him “school”. When he told me what I said aloud in my sleep (which I could almost remember dreaming exactly), the full weight of what I was suffering through hit me. And I didn’t want to do it anymore.

Quitting Is Hard

It was among the hardest things I’ve ever done. My personality practically demands that I see goals out to their completion once I start on them. Not to mention the decision did some pretty significant damage to the relationship with my parents. Emotionally, it was a very difficult decision. But the right one.

When the semester started up again, I went to see the person who recruited me (now happily back on campus) to tell him that I wouldn’t be seeing the program through to its completion and ask his advice on how to get my masters in the most expedient fashion. As it turned out, by deciding so early – before second semester classes really got going, I was able to shave time off the more typical 4 semester route to the consolation masters. Instead, I finished it in less than twelve months. Writing the thesis was one of the easiest parts of the whole ordeal.

Financially, It Was An Even Better Decision Than I Knew At The Time

The Pareto Principle (which we’ve talked about on our blog before), often also called the 80/20 rule, is the idea that 80% of the effects come from 20% of the causes.  I knew going in to grad school that I could expect 80% of the salary boost of PhD for the initial effort of a masters.  It just so happened to work out that getting my masters took nearly exactly 20% of the time investment I would have expected of a PhD. So I definitely optimized my time there.  But that wasn’t where the benefits ended.

Here’s what I gained by leaving grad school with my consolation masters instead of staying for 4 more years in the hopes of getting a PhD:

  1. Real wages and wage growth for 4 years, rather than little more than a subsistence level living stipend.
  2. The opportunity to move to an income-tax-free tropical paradise and keep more of said income to myself.
  3. The opportunity to invest in a Roth IRA for 4 years (which I did, to the tune of maxing it out at $18K over those four years – in addition to deposits into my 401K during that time, too). Though I was living frugally enough to save a few thousand dollars the year I lived off my graduate stipend, that stipend that was to be the source of my income during my PhD program was technically not “earned income”, and could not be used to invest in an IRA. So future years where it was expected to be my only income for the calendar year would have precluded me from the benefits of using a Roth IRA.  (For more info – Emily at EvolvingPF has written before about how taxable compensation and earned income affect one’s ability to contribute to an IRA, in a way that can be particularly limiting for graduate students.)
  4. Four additional years of experience, which in the industry I am in counts for far more than a PhD.
  5. The benefit of entering the job market while it was doing well (2006!), instead of looking to enter the job market when it was floundering (2010). Statistically, this gave my career and earning potential a significant boost that I continue to benefit from today, nearly ten years later.
  6. The best husband and partner I could ask for – Mr PoP. I don’t think our relationship would have survived if I had continued on in grad school for 4 more years. He is so supportive and encouraging of me doing what makes ME happy that I’m not sure he would have been able to stay with me through the kind of self-flagellation that would have been necessary on the path to the academic shrine of the PhD.

In the years since I quit grad school, I’ve had several old friends from the program comment to me that I really did optimize my departure, maximizing the educational and career benefit while minimizing my time and effort invested.  Others left the program a year or two, or even three years later than I did with identical or largely equivalent degrees – (I’ve found that for industry standards the MPhil that my friend took 4 years to earn is basically equivalent to the consolation masters I earned in a year) – but with no measurable difference in career opportunities than I have faced.

Maybe there’s an alternate universe out there where I stayed and finished my PhD and that Mrs PoP is deliriously happy. She’s riding a unicorn to work, is rich beyond anything imaginable, and impossibly beautiful.

I guess anything is possible.

But nine years after leaving grad school behind, I see it not only as one of the best emotional decisions I’ve ever made in my life but one of the best financial ones as well. And I’m quite happy in this universe where I’m married to Mr PoP, ride my bike every day to a job where I’m fairly compensated for my education and experience, and have accumulated over $900K in net worth.  And Mr PoP thinks I’m pretty darned beautiful.

Not only are there no regrets in my mind about quitting grad school.  I will forever rank it as one of the best decisions I’ve ever made.


* The unspoken subtext here being that in our field, jobs in academia are the only ones that really require a PhD to avoid working for peanuts (and sometimes even a PhD is not enough for that as many adjuncts can attest).

** My jaw literally dropped open one day when an emeritus professor (that’s academic speak for retired) informed me that without teaching or research responsibilities he now considered it his “job to make life difficult for young doctoral candidates”.


Have you ever quit something that’s purportedly good for you and been significantly better off for it?

32 comments to Quitting Grad School Was A Great Financial Decision

  • I too quit grad school! I went to a prestigious, big name school for a STEM PhD. I left with a consolation master’s degree after two years, mostly because I didn’t realize how truly miserable I was until the summer between years when preparing for quals. Thankfully, I graduated on breadth of research, so I didn’t have to write a thesis (tho I had lots of smaller reports and presentations).

    My first mistake was going in a non-lucrative field. I’m not directly working in my field, though I do teach what I learned. The classes I took my last term, mostly from other departments, were my favorites. If I had taken those earlier, I would likely have switched departments and had much more earning potential. I was really good at GIS and still sometimes wish I’d pursued that more.

    I also left and did even lower paid internships (think $190 a week + housing — ouch). But I didn’t go into any debt there, so that’s good.

    My path has not worked out quite as swimmingly as yours. I left grad school right around recession time (2008), but I did always manage to find some work to stay afloat. I went back to get my teaching license and came out of that with no debt but down $14k in net worth.

    I still think both going and leaving were good decisions for me. I was a TA, and I learned there that I really did love teaching and wasn’t a fan of all bench work. I made great money while there. Unfortunately, I didn’t invest it (hindsight), but I did save quite a bit and pay off a car loan, so that’s something.

    Overall, though, my main benefit is that I ultimately got to a life I really love. We are doing just fine. And I’ve been able to be a sounding board for my friends who went to grad school later and are struggling with similar decisions.

    end note: I also made my best financial decision ever in grad school, and that was the decision to NOT buy a house. My parents and lots of friends were encouraging me to in the guise of saving money on rent over the course of the PhD. So glad I didn’t get saddled with that when I left.
    Leah recently posted..What I’ve learnedMy Profile

    • Cheers to the decision NOT to buy the house! My friend lived in a house that a fellow grad student had purchased and it ended up being an albatross rather than a boon for the owner over the years.
      I’m glad you’ve ended up in a place where you are truly happy. I imagine you’re a wonderful teacher. The year after I left another female student who was older than me (basically ABD) left to teach at a boarding school and the department faculty were apparently shocked and horrified as she was incredibly intelligent and no one had seen it coming. But I’ll bet she’s been an excellent teacher as well.

      “I left grad school right around recession time (2008), but I did always manage to find some work to stay afloat. I went back to get my teaching license and came out of that with no debt but down $14k in net worth.”
      It really is amazing how much timing can play a role even in a profession that seems like it would be recession proof. I taught for a year after leaving grad school, but instead of having to pay for a certification, actually had slightly higher compensation due to teaching in a high needs subject area and got a temporary certification. If I had stayed another year, I could have earned my full state certification through the free program at the school district. My cousin graduated with a masters in teaching in 2012 and I think has barely found a contract for a full time teaching position this year…

  • Wow – it sounds like you made a great choice. It’s funny how a decision you made for your emotional well being paid off financially! I once thought about going into academia for accounting, because when I was finishing up undergrad accounting professors were in hot demand, and starting salary was $150k! But then I realized I would NOT like the researching/publishing that would come along with it.
    Fervent Finance recently posted..The Cost of an EducationMy Profile

  • My friend, that’s not a unicorn the alternate Mrs. PoP is riding: that’s a shaft.

    As one who did finish the PhD — though not in a STEM discipline — I can second your observations con brio.

    In the first place, academic careers even in the STEM fields are less than promising. Research funding is disappearing, and even people who have achieved tenure are leaving the academy. Young graduates, though they have an easier time landing real-world jobs than do liberal arts PhDs, may find themselves with no more opportunities than a PhD in English has.

    The best jobs I ended up with after graduate school did not require a PhD. Some didn’t even require the master’s. If I’d started in magazine journalism the day I walked out of my undergraduate program, today I’d be retired on proceeds of the sale of the large city magazine that I would have owned (or out-competed…) by the age of 50. If I’d stopped at the master’s degree and gone to work teaching full-time in the community colleges, today I would be retiring from a six-figure job.

    I pushed on through the program because, like many of my colleagues, I kept thinking “I’ve come this far; I can’t quit now.”

    Well, yes I could have. And I almost certainly should have.

    You made the right move. The smart move.
    Funny about Money recently posted..Fleas?????? Is there ever a break from the timesuck?My Profile

  • Thank you for sharing this story. It is so important to acknowledge that sometimes quitting is the best choice, and doesn’t make you a failure at all. I planned to double major in college and ended up quitting the second major about half-way through. I decided that I could either have a little fun in college (still not too much, I studied architecture which is a notoriously time-intensive major) or get a double major, but not both. For me, the experience of college turned out to be worth it. I’m happy with where I am today, and I doubt I’d be here if I had stayed on that path.
    Ali @ Anything You Want recently posted..Trip Recap: A Week in the Cote D’Azur and ProvenceMy Profile

    • I made a similar decision in undergrad when I was presented with the opportunity to study abroad my last year. I could have stayed at my university and finished my second major. I was mostly short lab courses for that major and those wouldn’t be open to me at the study abroad university given the program I had applied for. So I dropped that major to a minor (knowing I didn’t have any desire to work in a lab ever!) and went on the study abroad instead.

  • Good for you Mrs. POP. It takes a lot of courage to walk away from something you know isn’t right when you’re subject to the judgment of others. Sometimes I think we get so focused on more education that the logic behind it is no longer there. Luckily, you realized that it wasn’t for you and you didn’t torture yourself in the process!
    Mrs. Crackin’ the Whip recently posted..The Crackin’s July Balance SheetMy Profile

    • Yeah, the judgement of others was definitely the hardest part of leaving. I know there are past advisors and mentors (in addition to parents) that still don’t understand my decision and were really disappointed with it and that saddens me a little. Not enough to go back by any means, but a little. =P

  • All our friends who didn’t go to grad school are multi millionaires!

    Last night I forgot I was a professor and dreamed pretty much your scenario. I was trying to figure out how to get a job so I could afford housing after quitting school. It took a few minutes when I woke up to realize I was older and had a job and kids and stuff.
    Nicoleandmaggie recently posted..Figuring out the commuteMy Profile

    • “All our friends who didn’t go to grad school are multi millionaires!”
      By that measure, I suppose we’re under performing, then. =)

  • Glad to see we followed similar smart paths early in our adult lives. :) It’s probably no coincidence that both of our net worths have grown to approach or exceed seven figures.

    One of the rarely talked about costs of higher ed is the opportunity cost; the cost of losing 2, 3, 4 or more years of working experience if you pursue post-baccalaureate studies.
    Justin @ Root of Good recently posted..Why Dropping Out Of School Was A Great Choice For MeMy Profile

    • The opportunity costs are definitely real. Not only the lost wages of those years, but the wage growth you would have had from increasing your experience then! Unless the benefits provide a large leap-frog up the financial ladder, I think more people than realize it would be better off financially forgoing the time and cost investments of higher education.

  • Oh crap! We invested in my husband’s Roth last year, but he’s on a stipend. Might need to double check our standing with the IRS- Yikes!

    • Since you’re married, you might fall under the spousal exception which allows the earned income of one spouse to be contributed to an IRA in the name of their spouse without earned income. It allows SAHPs to have retirement accounts in their own names. Not sure if that is somehow limited by an “unearned” stipend, though… I doubt it, but could be wrong.

    • 1) Second what Mrs. Pop said – if one spouse has taxable compensation (basically any job!), you can contribute to both spouses’ IRAs.

      2) A ‘stipend’ can be either taxable compensation or (for lack of a better term) taxable non-compensation. If your husband received a W-2, he can contribute to an IRA from that income. If he received any tax documentation other than a W-2 or no tax documentation whatsoever, that income is not supposed to be contributed to an IRA. But see #1.
      Emily @ evolvingPF recently posted..Cross-Country Vacation Part 1My Profile

    • Thanks everyone! We double checked our tax documents last night. The income is sheltered from Social Security, but was considered W-2. Weird, but legal.

  • Heidi

    I totally agree with this. I started the STEM PhD and left last year with the consolation Masters…..and I can sleep now, jumping off a building has lost it’s appeal :), I can laugh again, and I’m happy. I found a job right away with my Masters, and am making more money than I was before with just my Bachelors.

    Going into that program was the WORST two years of my life- and yes, you are totally correct that academic hazing is a thing. Being told how incompetent or lazy your are every day is NOT a healthy thing.

    • Being told how incompetent or lazy you are every day is DEFINITELY NOT a healthy thing!!!

      I honestly don’t understand how these kinds of behaviors have been allowed to linger in academia, which is stereotyped as a bastion of PC-ness. In industry, I’ve found it to be incredibly rare to run into an abusive superior. Actually just once in 9 years so far – a guy who felt it was his duty to haze new hires and took particular joy doing it to females apparently – and the one time it happened, as soon as it became clear to the staffer the situation went up the flagpole and was nipped in the bud.

  • In a funny way, my husband and I went through a similar process this summer with his decision to not do a “real postdoc” (after being a non-real postdoc for 1 year) and instead jump into an industry job. I think it’s difficult for a capable and ambitious person to decide to not pursue the highest level of achievement in the career that is in front of her, no matter how good a decision that non-pursuit can be (and how attractive other careers!). I’m glad my husband only spent a year as a postdoc instead of five, only to end up in the same type of job on the other side.

    I went through a period of about a year of considering to quit my PhD, but ultimately decided to finish it (but then not waste any more time in academia as I knew it wasn’t for me). It’s hard to tell at this stage (one year out), but there is a very good chance that was a poor financial decision. However, I think I have the type of disposition where I would be pretty satisfied with my life no matter if I finished grad school or what career path I pursued. I feel okay about finishing, but I think (given some time), I would also feel okay about not finishing.
    Emily @ evolvingPF recently posted..Cross-Country Vacation Part 1My Profile

    • I hope Kyle is loving his new job! Hopefully he won’t have any regrets about not choosing the (prestigious but much lower paying) post-doc.

      Out of curiosity – how far along were you in the program when you toyed with leaving? In a lot of ways I can understand why you might have chosen to finish. You were married and Kyle was at the same university – a job to increase income might have been tough to find while staying in the same location as a spouse, and separation is not ideal, either. Two households = more expensive and less enjoyable.

      • So far so good! No negative surprises and I think he’s happy with the ‘we’re all on the same team’ aspect of being in industry.

        I started thinking about leaving with my master’s approximately concurrently when we got engaged/married – from the end of my second year to the end of my third year. On a conscious level, I think the two are unrelated (my second year was when I switched projects and I started seeing some success with that in my third year), but perhaps our marriage unconsciously opened me up to reconsidering my career path. But yes, it was an easy decision to stay in my program with respect to keeping our relationship on the same track as it had been before we got married, working a building away from one another and commuting together and all of that. Durham has a pretty decent job market in my area so I don’t think I was too concerned about not finding a job or having to move, it was more than I was excited by the career options a PhD would open up.
        Emily @ evolvingPF recently posted..Apartment Search in SeattleMy Profile

  • I feel that. There was a few years for me right around the same time when I was contemplating getting a Masters degree. As an accountant, in most states you need a Masters to be a CPA. But I was pretty sure I didn’t want to work as a CPA, and didn’t want to go through all the work and exams just to get those three letters. I thought about getting a Masters in another field too, but just didn’t see where the payoff would be. And I wasn’t super psyched on the idea of going back to school. So I never did and I’m doing fine.

    I know a few people who have gotten PhDs. It does leave you incredibly smart about one teeny-tiny subject. I’m glad those people exist, but it’s not for me.
    Norm recently posted..The Hottest Cell Phone You Need To Own RIGHT NOW!My Profile

  • Kudos to you to getting out early. I’ve had friends stay in their grad programs for 8 or 9 years even though they hated their topic/PI starting around year 3 just to justify the sunk time. Also, curious, did you have any roadblocks you had to deal with to prevent your institution pulling funding after you went the master’s-only route?

    For me, I ended up not going to med school, which had been the life plan since middle school, and I feel significantly better off for it. It wasn’t until I started going to interviews and seeing all the divorced doctors and already-jaded students that I realized it wasn’t really the lifestyle that I wanted. Not to mention I would have ended up potentially hundreds of thousands of dollars in debt right at a time the govt stopped subsidizing grad student loans in exchange for equal or less to what I made straight out of undergrad (the specialty I was interested in required a lot of training and was particularly non remunerative). I do feel tiny pangs of regret once and a while, but I’m glad I made the decision since it means (1) I’m not in school right now, (2) I have money, and (3) I have time for real human relationships.
    Taylor Lee @ Engineer Cents recently posted..New Corporate OverlordsMy Profile

    • I cannot imagine staying 8 or 9 years doing something that I haven’t liked in 5 or 6 years! But I suppose people do that outside of academia, too.
      I didn’t run into any funding roadblocks. Plus, since I actually lightened my coursework the second semester taking more “elective” courses that I found enjoyable (and would count toward the masters) rather that the PhD track required courses under the more miserable of the faculty – I was able to take on part time work to earn extra money, and much of that work (tutoring, TA-ing, and teaching a summer session) was referred to me by the department. There didn’t seem to be any ill-will about funding me through completion, but it was basically just another semester and I had technically already started that semester (and funding had been disbursed) by the time I told them I needed to get out. Maybe they would have put up a fuss if I wanted to stay another full year after saying I was no longer intending to get a PhD? Who knows.

  • I’m also a grad school dropout! I graduated from college early with no idea what I wanted to do and did administrative work for a couple years. Mr. FP wasn’t sure he was on board with children, which were the only thing I knew for sure I DID want. So I think the idea that I should do a PhD–in English!–came out of wanting something important instead. I was all of 22 at the time.

    It wasn’t as bad as your experience–people were pretty nice. But no one really seemed to enjoy reading! And I wasn’t even very good at it. I remember being chastised for talking about Jane Eyre as if she were a real person.

    Going in the first place was a terrible financial decision. I didn’t make enough to live on and then I futzed around for three semesters teaching community college for $1500 per class.

    I eventually got ANOTHER master’s, this one at my own (modest) expense (and with some help from Great-Grandfather FP). You know who loves reading? Librarians! Now I am a part-time librarian and mommy of two.

    I am quite sure there is no alternate universe in which I am an English professor :-).
    Frugal Paragon recently posted..I’m Making a Skirt! Phase 2: Gadget TestingMy Profile

    • Wait, Jane Eyre isn’t a real person? I suppose you’re going to tell me next that Huck Finn wasn’t either!

      I’m glad you found a place that you enjoy – despite the circuitous route to get there. I <3 the library, but don't know if I'd want to be a librarian!

  • Sounds like you definitely made the best decision for your needs.

    I can’t imagine having mono in college. I had it in high school, and it knocked me out for three weeks. As for the fatigue… Well, I guess it was just a preview of the stuff I’ve dealt with since I was 19. Call it a prep course, I guess.

    And hey, I bet riding a unicorn is uncomfortable. So you’re not missing out on anything.
    Abigail @ipickuppennies recently posted..A bit of housekeepingMy Profile

    • Yeah, mono sucked. In hindsight, I’ve got a pretty good idea of when I contracted it (visiting a friend who was diagnosed a couple weeks later when I was no longer in town), but I wasn’t diagnosed until 4 or 5 months later. Pretty much anything that wasn’t “mandatory” went by the wayside during those months, but it was a really weird stage in my life so I thought the exhaustion was due to studying too much and then being a camp counselor that summer. Didn’t really give the exhaustion too much thought at the time. When I was finally diagnosed there was a good amount of “oh, well that makes sense…” when looking back at the previous months. But the fatigue wasn’t over then… it still lasted 6 months or so where my energy levels were well below my norm.

      I can’t imagine having chronic fatigue for years the way you have. Mono’s my nearest comparison point and I just never felt like I was “100% with it” that whole time.