Today I was talking to someone from college about graduate school and money. He said that going to graduate school was a good idea because you got paid more, I said that the pay increase was minimal (for this major at least) and that by going to grad school you were missing out on the income you could make with a bachelors.

So assume there are 3 people. Person A has a bachelors, Person B has a masters and person C has a doctorate.

Person A enters the workforce at year 0 and starts at 30k a year. His income increases by 10% a year until it reaches 50k a year. It then stabalizes.

Person 2 is a graduate student from years 0-3 and earns 18k a year. This person then enters the workforce at year 3 and starts at 40k a year. His income increases by 10% a year until it reaches 67k a year. It then stabalizes.

Person 3 is a graduate student from years 0-7 and earns 18k a year. This person thenenters the workforce at year 7 and starts at 55k a year. His income increases by 10% a year until it reaches 78k a year. It then stabalizes.

At what year will person 2 have outearned person 1? When will person 3 outearn person 1?

Lets also discuss hours. Assume person 1 puts in 2000 hours a year at work. Persons 2 & 3 put in 70 hours a week at graduate school and assuming they get some of the summer off put in about 3000 hours a year total while in graduate school.

After how many hours of work will the total income (years 0-n) of person 2 be higher than person 1? What about person 3 vs person 1?