Have you ever thought about doing a PhD in STEM (science, technology, engineering, or mathematics), and wondered how much money you make? Having gone through the grind myself, I thought I’d take a look at the numbers. I dug through my old W2s and found my net income during grad school. I wanted to answer the question: Is doing an engineering PhD worth it, financially?
How PhD students are paid
PhD students in STEM are typically fully funded – their tuition is covered and they are paid a small stipend. In return, PhD students work as research assistants and occassionally as teaching assistants. The money to cover the stipend and tuition comes from their professor’s research funding, which in turn comes from various sources, such as the National Science Foundation or the Department of Defense. The amount of the stipend is typically set by the school based on local living costs, and is public information that can easily be Googled. In general, it’s around $20-25k for the 9 months of the academic year. In the summer, students can continue to work as research assistants for additional pay, or look for summer internships.
This is different from a professional school like law or medicine, where you are paying to attend school. Getting paid to do your PhD sounds like a sweet deal, no? But professional schools usually win out in the long-run in terms of earning potential.
Income during grad school
The numbers I’m showing start from my first year of graduate school and end with my first year of full-time work. The average grad student salary for the full year (including summer) is about ~$30k, with a small bump during my 2nd and 3rd years when I did a summer internship at a company. Companies pay better than grad school, boosting my income to ~$40k. In my last year of grad school, I graduated and started working halfway through the year, so my income got a big boost. Finally, in my first year of full-time work, my wages jumped to their current value.
$30k per year as a PhD student is livable! (especially if you’re single) Minus taxes and other deductions, that’s ~$2000/month. My typical monthly budget as a graduate student was:
- Rent + utilities: $1000
- Food: $500
- Entertainment + shopping + travel: $250
- Savings: $250
It’s enough for eating out fairly often, a reasonable amount of entertainment, and some savings. Of course, I wish I had saved more, but I think the above numbers are a pretty accurate reflection of my expenses as a grad student.
Comparison to not doing a PhD
While the grad student stipend is livable, there’s a significant opportunity cost, especially in engineering, where a PhD is not really required. Unless you want to work in a research lab or become a professor, a Master’s degree is probably enough. For example, my friends came out of the same undergrad program and started working for $80k. What’s the financial benefit of working directly after undergrad? I looked up the median salary of my field ($95k) and plotted the cumulative wages from starting work at that salary directly after undergrad, compared to doing a PhD for 5 years and working in academia afterwards:
As you can see, there’s a significant dip in during the first 5 years, while I was in grad school. After that, once the PhD graduate starts working, the gap starts narrowing. 13 years after undergrad, doing a PhD finally catches up to working directly out of school. 13 years is a long time! So, financially speaking, doing a PhD and working in academia afterwards is not the best choice. I think the trend would be similar for someone receiving their engineering PhD and going to work in industry afterwards. From my PhD friends’ experiences, the salaries for PhDs are not significantly higher than salaries for fresh undergrads – maybe $10-30k more.
There are lots of caveats to this graph, of course. It depends on the working salary directly out of undergrad. It depends on the working salary after a PhD. And most importantly, money isn’t everything – I learned so much during grad school. It helped me grow as a person, both professionally and personally, which will hopefully contribute to my future success. Then again, I probably could’ve learned a lot from working too. Just keep in mind that the numbers I’m showing are from one data point, from my particular case, and from a purely financial standpoint.
Do you think doing an engineering PhD is worth it? Is a professional school worth it, despite the high tuition, because of the higher salaries? Or is it better to gain hands-on experience by entering the workforce directly?