 is a PhD worth it. That's what we're gonna be talking about today, but before we get into that, let's gently tap the like button in order to defeat the evil YouTube algorithm. On this channel, we talk about personal finance, college degrees, careers, and opportunities that are gonna lead you to success. And we also go over some of the common mistakes that you see so many people falling for. Now, if you're new here and that sounds like something that interests you and you haven't done it already, go ahead and hit that subscribe button and ring the notification bell so that you never miss out. So with that out of the way, let's jump right into it. So I've decided to save you all the suspense in this video and just tell you right off the bat what the answer is to the question, is a PhD worth it? That's right. The answer is, it depends. Bruh. Okay, okay, you want a more specific answer? Fine, fine, I'll give it to you. This is a personal finance channel, so you have to keep that in mind. So from a personal finance perspective, a PhD will usually not be worth it. And by that I mean getting a PhD versus getting a master's or a bachelor's, you're probably not gonna make that much more money, but there are a few exceptions and I'm gonna talk about those in this video. And I'm also gonna go over reasons other than the financial aspect of why a PhD might be worth it. But first, let's go ahead and talk about the fact that student debt is absolutely out of control. According to the National Center of Educational Statistics, the average debt for a PhD graduate is around $108,000. Now part of that debt is gonna be from their undergraduate degree, usually that's gonna be a bachelor's and then part of it might be from them getting a master's and then going on to get a PhD. There are many instances where PhD programs are fully funded so you actually don't have to gather any student loan debt while you're in the program itself, but many of them unfortunately aren't. Now I couldn't find any exact figures, but the ones that tend to be fully funded are usually in degrees that are already good in the first place. Majors like engineering, math, technology, et cetera, those do tend to be fully funded. Whereas ironically, a lot of the time the degree tracks where you might have to actually get a PhD in order to work in that subject or that field are the ones that unfortunately aren't fully funded. So if you do decide to go this route, make sure to get into a fully funded program because $108,000 of student loan debt is a lot. The total federal student loan debt right now in the United States is about $1.7 trillion. Now we're not gonna get into how this ridiculous catastrophe happened. I've made other videos where I talk about that, but basically most people know it's bad, but it's actually even worse than it looks. The total credit card debt in the United States of America is over $1 trillion, which is a lot. The total amount of auto debt, AKA car or vehicle debt is about $1.2 trillion, still not as much as the total amount of student loan debt. Over half of the $1.7 trillion of student loan debt is from graduate school alone. In fact, graduate school might be the biggest offender in the student loan debt crisis. The reason for this is there's a lot of arguments that the way the college system is set up is that it incentivizes people to go into particular degree paths that won't end up getting them a job with just a bachelor's level degree. Then a lot of them end up going to graduate school because they pretty much don't have any other choice, and of course the school benefits from that by making a lot more money. And this leads to my second point, which is if you do end up having to pay for graduate school using loans, the type of loans you take out are actually much worse. Now typically undergraduate loans are gonna have an interest rate of somewhere around 3.5 to 5%. On top of that, when you take out these undergrad loans in order to get a bachelor's degree, they usually don't start accruing interest until after you've graduated. Now 3.5 to 5% really isn't all that bad, especially when you consider the fact that if you were to just put money into the stock market, like an index fund, for instance, you'd get about 7% return on average. However, when it comes to graduate schools, you take out what are known as grad plus loans, and the interest rates for these loans are over 7% per year. For instance, last year the interest rate on these loans were 7.6% and the year before they were about seven. On top of that, there's about a 4.2% servicing fee that they take out right at the beginning when you first get your loans. And if all of that wasn't enough, the money that you take out starts gaining interest right away. This is why if you're becoming a doctor, for instance, that might take seven to 10 years of schooling, all of that interest is going to be accruing and compounding the entire time while you're still in school and you're not able to make any payments. So by the time you start paying your loans, the total amount might have almost doubled and you end up as a clickbait thumbnail on a Dave Ramsey video. Now the average student loan amount that you take out for a bachelor degree is around 40,000 a year. For a master's degree, it's gonna be around 66,000, and for a PhD, it's around 108,000. And a lot of that 108,000 dollars on average, again, if you get it fully funded, you don't have to worry about this, but on average, a lot of that 108,000 is gonna have 7% plus compounding interest. So I guess the big point here is make sure that if you do go for a PhD that it's fully funded, because the next point is that it's going to take a really, really long time. Now most people think that a bachelor's degree takes around four years, and then you can tack on another two years for a master's degree, so that would be six years total for a master's. So a lot of people also think that getting a doctor would be another two years on top of getting a master's and that would be about eight years total. But unfortunately, nope, that is completely false. The average PhD completion time is about 8.2 years on its own. So if you get a master's before getting your PhD, it's gonna be the time it takes for you to get your master's plus another 8.2 years. If you get a bachelor's, then you go directly into a PhD program. It's gonna be four plus 8.2, which is around 12 years. This is why the average PhD graduate, when they finally get that piece of paper that says that they're a doctor, is gonna be around 33 years old. And all that time while you're getting your PhD, they are gonna be working you hard. You're probably gonna be working like 12 hours a day, six to seven days a week. Now for me personally, and I think a lot of people who watch this channel are the same way, is yes, I do like to work, I wanna have a good income and make a good living and all that sort of thing and I wanna enjoy what I do, but I also wanna have a good work-life balance. I want to have a good work-life balance. I think a lot of people are like this as well. And working 12 hours a day, seven days a week throughout all of your 20s and then into your 30s is probably not a great way to have a good work-life balance. It's nice to have the freedom and flexibility to start a business, travel the world, enjoy time with your family and your friends. I know I'm like this and I think a lot of other people out there are like this as well. And then even when you graduate, you're like 33 years old, you're still gonna have to pay back all those student loans, which if you do it aggressively, it's still gonna take you probably around three to five years. And here's the thing, this is all assuming that you actually finish your PhD. And that brings me to my next point, which is many people end up not finishing their PhD. In fact, only about 57% of PhD students will finish it within 10 years. Now that's on average, but it gets even worse when you dig deeper into it and you look at the field of study. When you look at it closely, you'll find out that the types of PhDs that weren't able to get a job with just an undergraduate degree are also the ones that have the lowest graduation rates. For instance, the 10 year completion rate is only about 49% in humanities. So the students that need to have a graduate degree the most in order to be able to get a job in that field are the ones that are least likely to graduate. And I guess if you look at it from a supply and demand perspective, that kind of makes sense if you have a ton of people graduating with this degree because of the fact that they couldn't get a job with a lower level degree, that means there's gonna be a lot more competition. To put this in another way, the students that are most likely to go to graduate school out of necessity, not because they chose to but because they basically had to are the ones that are least likely to graduate. They're the least likely to get through graduate school and finish their PhD. Now there's a number of different factors that go into this, but just to mention a few, you have to write a dissertation where it is basically original work in your field. At the end of this dissertation, you're gonna get grilled by an entire room full of people who also have PhDs and their experts in that subject. And one of the people grilling you is going to be your advisor and this is kind of a make or break situation. If you have a really good advisor, it's probably gonna be a lot easier for you. And if your advisor isn't so good, it's gonna be much more difficult. Oh, and by the way, if you end up not getting your PhD, you still have to pay all of that student loan debt back. The school has no skin in the game whatsoever. There's no accountability there. You take on all of the risk yourself. So if you end up dropping out a day before you're supposed to graduate, then you have nothing to show for it. Now the next thing I wanna mention is gonna be a little bit controversial but just hear me out. Graduate school in many ways, especially PhD programs, are a little bit like a pyramid scheme. Now I'd like to point out that this does not apply to all types of PhDs out there. There are some that are pretty good and you can actually get jobs that you wouldn't have been able to get otherwise with a PhD. For instance, there are a lot of opportunities out there for people who get PhDs in engineering and mathematics that you wouldn't be able to get into otherwise. And these opportunities will likely not become saturated in the future just because of the fact that you can easily get a job with just a bachelor level degree. And so there's not that many people that end up going for a master's or a PhD. However, for a lot of other types of degrees, my research was a little bit shocking. One thing I found out when researching graduate level degrees, especially PhDs, is that they were very similar to a pyramid scheme. Now a pyramid scheme, if you're not aware, is an unsustainable business model where only the few people at the top end up profiting and pretty much everybody else ends up either losing money or not making any. So basically how this works is the people at the bottom of the pyramid end up going into a particular field and they get a bachelor level degree because they think that they'll be able to get a job. A lot of the time they'll find out three or four years in that they probably are not gonna be able to get a job in that field. So many of them will end up going for a master's or even a doctorate level degree. Now even at the doctoral level with a lot of degrees, there's still not a lot of opportunities out there. And so a lot of them will end up trying to become professors. Now don't get me wrong. If you become a professor, especially if you're a tenured professor, that is a really sweet gig. And many people work their way up the hierarchy in the university system and they could even end up becoming presidents that can make millions of dollars a year. But very, very few people in some of these degrees end up making it to that top level becoming professors or becoming presidents. First of all, a lot of them end up dropping out and not getting their PhD in the first place and the few really stubborn ones that get their PhD, very few of them will end up becoming a professor. Very few of them will even end up working in the field that they got their PhD in a lot of the time. Now, if you think I'm some kind of crazy conspiracy theorist, go ahead and check out the subreddit r slash grad school where they talk about this stuff all the time. So a couple comments on here is, one of the funniest, most depressing parts of this sub is how many of us have independently come to the conclusion that academia is a pyramid scheme. Another one here is the PhD postdoc professor system is most definitely a pyramid scheme. There is even a comic on the website phdcomics.com. It's literally called PhD Comics that kind of makes fun of this whole system. So I'm definitely not the only person talking about this and warning you guys about this. It's a really big problem. Now, the next thing that I wanna talk about here is the fact that you don't make all that much more money than if you got a bachelor's degree. Now, I know what you're gonna say. Master's degree, PhD holders, they make way more money than their bachelor degree holder counterparts, right? Nope, actually, in general, master's degree holders only make around 23% more than their bachelor's counterparts, even though they take out a lot more in student loans. And with a PhD, it's even worse. You only make about 26% more, so 3% more than a master's, even though they take out way more in student loans and it takes a ton of time. Now, for the purposes of this video, just to illustrate this, I set up a very simple spreadsheet where I talk about how much you earn with a bachelor's degree, a master's degree, and a PhD, and how long it would take you to catch up with a bachelor's degree if you decided to go back to school and get your PhD. Now, again, this is not perfect, but let's say you start off at about 22 years old with a bachelor's degree, you're earning $50,000 a year and you have $35,000 in student loan debt. With a master's degree, you'd be starting at 24 years old, you're gonna be making around $61,500, which is 23% more, and you're gonna be starting with $66,000 in debt. With a PhD, you're gonna start off at 30 years old. Yes, I'm being nice here because the average PhD graduate is 33, but I'm gonna go ahead and be nice. You have around $108,000 in debt and you're gonna be making around 63,000 a year, which is 26% more than a bachelor's degree holder would be making. Now, I kept this extremely simple for the purposes of this video, but when you run the numbers, it becomes very obvious which ones are the best. So, a bachelor's degree holder will have the highest net worth here out of all of them until about 32 years old. At this point, the master's degree holder will have a higher net worth. The doctorate degree holder is way behind both of them though and they will not catch up to the bachelor's degree until they're over 60 years old and they don't catch up to the master's degree holder until they're 276 years old. But wait, there's more. We never added in student debt. When you add that in, it's going to skew it even a little bit more. The bachelor's degree holder will have the highest net worth until they're about 36 years old. At that point, the master's degree holder will overtake them. And the PhD will not catch up with the bachelor's degree holder until they're about 68. Now, it gets even worse when you factor in the interest rates on the grad plus loans. In that case, it's hard to calculate because some of it's going to be undergraduate loans and some of it's going to be grad plus loans, but you could probably tack on a couple more years at least. So, the bachelor's degree holder is going to have the highest net worth until around 38 to 40 years old somewhere around there. And the PhD holder would not pass up the bachelor's degree holder until they're both in their 70s and probably retired. So, this shows that getting a PhD from a personal finance perspective is not that great. And honestly, I was being really nice to the PhD and the master's degree in this situation. There's probably a bunch of other things that we could add in there, like opportunity cost and all kinds of things like that that make it even worse. And it's just crazy to me that a lot of people aren't warned about this before going to college. A lot of the time college counselors won't even warn you about this stuff because it makes the college more money if you end up going back to graduate school. And university, unfortunately, just like everything else at the end of the day, is a business. But let's say that you have your heart set on going to graduate school and getting a PhD. It doesn't matter what I tell you, you're gonna do it anyways. Fair enough, I respect your decision, but there's a few things that you wanna think about before going. There's really only two reasons that you should be going to get a PhD. One is you're going for a position where there's no other way that you could possibly get that position than getting a PhD. Something like becoming a rocket scientist for NASA or a professor at a big university that has to have a PhD. There's just no other way for you to get there. You absolutely have to have that piece of paper, that PhD, in order to get hired. And then the second reason is that you want to understand a subject on the highest possible level. You understand it so well that you're actually going to be contributing to the field as a whole. And you'll likely sacrifice a ton of time and money in order to do this, but if it's something that you're extremely passionate about, then it can be worth it. If you haven't done it already, go ahead and gently tap the like button, hit the subscribe button, ring the notification bell, and comment down below any thoughts, comments, criticisms, et cetera, that you have on the video. And before you leave, don't forget to check out my other videos right here. I made them just for you.