How do you ask for a raise?

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I started with the current company I'm with thru an employment agency back in Dec 2005, come April 2005 I got hired permanently, the last day in May 2005 I had my son and went on maternity leave for TWO weeks. This past April I have been with this company for a year and got a 4% pay increase, which is good (I guess). I have also been going to school this entire time to get my degree in Business Administration and Accounting, which I now have. I get paid WAY less than the median annual salary for the area I work in and they tell me this is because of the type of industry we work in. I have sent an email to my corporate office telling them that I am finished with school in hopes that they would give me an increase which I thought would happen, but all they did was say thanks. Nice, huh? So now my question is how do I ask them for an increase that will work for me? and should I tell them that I'm currently looking for a new job, as I would like to work closer to home and need more money? Please help!!