From the mailbag:
Andrew,
I wanted to get your thoughts on a Masters Degree in Accounting. I graduate this May with an undergrad in accounting and plan to start taking the CPA exam this summer. I have always planned on going to grad school, but just wanted to get your thoughts on if the benefits out weigh the costs of obtaining a masters degree as opposed to simply meeting the hours requirements for a CPA. It would be $5-10,000 vs. $30-40,000. I also have around $7,000 in debt currently and a 3.1 GPA.Thanks,
Bean Counter Fan
This was one of my favorite questions I’ve received to date!
Average student loan debt is $26,000 per student last year. We’re no exception. Personal finance is something that eludes most accountants. Shocking but true. I speak from my own personal experience and dumb mistakes ($55,000 in student loans which I’ll be done paying off any day now)!
This is my personal opinion and some people may disagree but I stand by it. Masters Degrees in accounting are near worthless. I know because I have one!
CPA > Masters Degree
What do you need to have your masters for?
To teach? No.
To get a job? No.
To get the CPA? No.
So why did I do it?
Here is the ONLY reason I would get a masters:
- Minimal difference in cost (less than $5,000)
- You need the same amount of hours to get to your 150 CPA hours requirement as it takes to get a Masters
I fell into both categories. I graduated my bachelors with 124 credit hours. The masters was 30 hours and I needed 150 for the CPA exam. Only 6 hours more and I have the degree! At about $500 per credit hour, it was minimal cost for a second degree.
The decisions this guy is about to make is going to be one of the best in his life! He has a 3.1 GPA which means he can land a great job making $40-55,000 in his first year.
With the $7,000 in debt currently adding $10,000, he should start working as a CPA with about $17,000 in student loans.
Making $55,000 a year, he should be able to pay that off in about 8 months.
The trick is to graduate and continue living like your in college for at least a year! You keep your expenses below $20,000 and you’ll be in great shape.
A debt free CPA in his early 20’s, that’s pretty incredible and quite rare. I knew a woman at PwC who had $150,000 in student loans. Very very sad story…
If you really want to go crazy, get a job during your additional coursework.
I worked 40 hours a week while taking 12 hours of Masters courses, and I passed the CPA exam during that time. If I can do it, so can you. It’s only a year.
If you’ve got a bachelors, you should be able to make $35,000 or so. Heck with that you can cash flow this Masters degree and only have the $7,000 when you start. With that you’ll be done in 3 months!
If you pass the CPA exam, your $1 to 5,000 (size depends on the firm) bonus will nearly knock that sucker out in Month 1!
My point is this:
Are you going to be the guy who has $3 4 or 500,000 when you’re 30 years old (or more)? Or are you going to add a car loan, mortgage, and credit cards on top of $40,000 in student loans? You can let that hover around keeping your net worth at zero or negative zero for 10-15 years? Most people do.
The next year of your life will set the tone. Get the required hours and get out. Get a job and get a firm to pay for your CPA exam and license. The masters won’t do anything but hurt your bank account!
