Riding Out a Recession Pursuing a Masters

Several college students nearing graduation responded to my post "Layoffs and Survivor's Guilt" expressing concerns about getting a job. And it's definitely more difficult to do during a recession. But as I've written previously, young adults are probably most able to absorb the tough job market. An option many have chosen is simply riding out the recession by pursuing more education.

According to this article, graduate school applications at U.S. universities are experiencing a surge.

Historically, graduate school applications spike during economic downturns, and already, many U.S. universities have seen significant increases.

Applications to the University of Texas' Masters in Business Administration program have soared by 24% for the spring semester, George Washington University graduate programs experienced a 7% hike and the University of California, Berkeley, saw an overall 6% rise in applications to its graduate academic programs, in which engineering and computer sciences dominate with an 11-point increase, according to Corinne Kosmitzki, director of graduate admissions at U.C. Berkeley.

Graduate school's expensive; so who's paying? Not the parents, most likely.

"I'm kind of thinking my future husband will pay it off," Miriam jokes. "Just kidding," she says after a short pause. "I'm paying for the loan."

She may be kidding, but that's exactly what happens to many couples. It's why some financial planners encourage students to pursue graduate work for the right reasons.

More and more young adults in the 22-26 demographic are taking on a financial burden in order to make themselves more marketable in an unstable economy. After paying for their children's undergraduate education, struggling to put food on the table post-layoffs or saving for a near-approaching rainy day, mom and dad are all tapped out, notes Catherine Williams, vice president of financial literacy for Money Management International, a non-profit, Houston-based credit-counseling organization.

Williams says many students she speaks with realize that taking out loans during an economic crisis "is crazy;" however, they choose to take on more debt in order to acquire degrees that would bring them sustainable income. However, Jeremy Vohwinkle, About.com's financial planning specialist warns, "Students need to be sure they are pursuing the degree for the right reasons with a high likelihood of maximizing the return on that money spent. Getting a degree for the sake of getting it because it's hard to find a job could do more harm than good."

I agree. $30,000 of school debt can cause a lot harm if unwisely considered. So please carefully consider it before you turn your nose up at that food service industry job.

Comments

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1. Ashley Harris said the following at 3:13 PM on Feb 12:

I almost did this in December! Thankfully, there were people in my life who counseled me to use the education and work experience I already had and enter the work force-- even if that meant taking a job I didn't really want.

2. DannieA said the following at 4:06 PM on Feb 12:

30,000 a lot of debt in Education???? Motte you kidding me? that's nothing...I've already paid 50K...30 is what I have left....

3. Motte Brown said the following at 4:22 PM on Feb 12:

DannieA:

I probably should have written, "$30,000 of additional school debt."

4. Jo said the following at 4:40 PM on Feb 12:

Ashley, "even if that meant taking a job I didn't really want."

Haha - that could be misinterpreted by your FOTF bosses. :P

5. Ashley Harris said the following at 4:50 PM on Feb 12:

A job I didn't want doesn't include my current job :)

I had applied to many Starbucks and banks before Boundless opened up.

6. Kristen said the following at 5:20 PM on Feb 12:

My tuition (once you figure in books and all the fees they tack on) is around 30K. I know that God will provide and I'll have to work hard to pay it off, but in my field, it's hard to find much below 22K/year. :)

7. Sarah22 said the following at 5:43 PM on Feb 12:

Typical...I'm in debt, so I'm going to rack up more debt!! It's total denial....

8. Alison said the following at 6:25 PM on Feb 12:

There are even professional career advice people advising against grad school in today's world. (Which doesn't mean don't do it or don't evaluate her advice with a grain of salt, but she makes a few great points.)
http://blog.penelopetrunk.com/2009/02/03/dont-try-to-dodge-the-recession-with-grad-school/

9. DannieA said the following at 7:26 PM on Feb 12:

Thanks Motte! That makes a lot more sense...even public colleges/universities are expensive nowadays.

(of course i did rack up those 30K give or take due to grad school...but in CA I can't work in the desired field without it...there's no 'entry level' you need a license to be a speech therapist...and you can't get a license without an MS or MA)

10. valerie said the following at 7:37 PM on Feb 12:

I'd just like to point out that in many programs, you can get an education for free via tuition waivers and teaching/research assistantships. I got my masters this way (and had our first daughter halfway through.) My husband was paid by his lab and through a fellowship for his masters and phd.

11. Anne said the following at 7:39 PM on Feb 12:

I honestly think the reason this blog was written was because more and more women are getting master's degrees. Apparently some Christian men are afraid of educated women. The blogs say it is ok for women to get an education, but they should not spend too many years getting it because they want to spend that time preparing to take care of a home. This is fine, but there is not a one sized fit all role for women.

12. Ted Slater said the following at 8:06 PM on Feb 12:

Anne (#11) -- my wife earned a master's degree. Steve's wife earned a master's degree. You can't accuse us of being "afraid of educated women."

13. Exchurchmouse, M.A. (Emily) said the following at 8:18 PM on Feb 12:

As of May 2008, I am officially Exchurchmouse, M.A from a very good accredited university. However, I didn't realize the consequences of leaving a secure position with benefits and sick days. I love my jobs (yes, I have two and I am still a part-time worker) and I am as healthy as a horse (despite the fact that my blood pressure is a little high) and my co-workers, but young sprouts fresh out of college and working should be cautious about making decisions regarding graduate school. (Even if that supervisor asked you if you got the memo....for the fiftieth time)

I tend to disagree about Christian men being intimidated or turned off by women who have advanced degrees. If somebody seems my M.A. (and I am not one who reads only academic journal and pontificates about theory and chaos) as a wall between him and I, well, who's problem is it anyway?

14. Celebrindal said the following at 8:22 PM on Feb 12:

My advice is that, if you are going to go to grad school, you should carefully plan how you can pay for it and as soon as possible. I'm working as a TA and I have only $900 left of my tuition to pay off. I'll be all paid up by the time I graduate in May with my Master's. I'm looking to get a Ph.D. in biology and I've already figured out the financial side so that I can survive and not rack up debt. I may not have any free time...but that's the price I pay to keep out of the swamp of growing debt.

15. BDB said the following at 10:06 PM on Feb 12:

Grad school depends on your field. Ten years ago, an MBA was seen as the ticket. Today, there are a lot more job openings for CPAs - but that requires at least 24 units of accounting, plus 24 units of other business courses.

If you're unemployed and have a bachelor's degree, getting a M.A. and teaching credential is probably a realistic option. There will be a lot of school cuts in the next two years, but after that, they'll be hiring again.

Lots of allied health fields, from speech therapy to nursing, strongly favor the Master's degree. In Engineering, maybe it an advantage.

Definitely pray about it, and pray about how to pay for it without debt. Even in fields that MBAs recruit for, the high pay is because the jobs are located in cities with a very high cost of living. You end up with "golden handcuffs" where you can't afford to quit a 70-hr-week job.

16. Brad said the following at 3:41 AM on Feb 13:

One year of graduate school at Wheaton College doubled my student loan debt, from $18,000 total for 4 years of undergraduate to over $36,000, and I chose after that one year to not even finish my degree. Right now I'm working as a golf course greenskeeper, making about $16,000 a year. I guess a word of advice I'd have for anyone after my experience is to make sure you have some real-world field experience in a career before you decide to spend the money getting an education for that career. You may end up paying for graduate school and really hating the career you "chose."

17. dana111 said the following at 6:30 AM on Feb 13:

Ted,

In my opinion, you should not have dignified Anne's biased and immature comment with any type of response.

Thank you for being so gracious!

18. Some Dude said the following at 7:07 AM on Feb 13:

Most of my tuition is being paid through teaching assistantships. It's a pretty good deal.

19. obewan said the following at 8:42 AM on Feb 13:

It really depends on how much the degree will cost and how much money a person has.

When I was laid off once, I followed a duel path. I was looking for full time professional work, doing interview trips, AND going to school at the same time. I told everyone in the interviews that I would quit school for the right full time job. They were OK with that.

The schooling filled the gap in my resume, and in the end, it did take me 2 years to finally land a full time job offer. But, I wound up with a second BS Degree and a couple of certifications. I was able near the end to land a part time job as a CAD operator at an engineering firm to help with expenses.

A MS degree is not always the best answer. When I got my job offer for a software engineering job, I beat out another candidate with a MSCS from a top school, and we were both going for the same salary range. I felt funny because he was a friend and former co-worker. I did have 8 years experience in software QA, and he had zero work experience with software other than school.

It wound up costing me about $20K from my savings including all food and housing because I went to a cheap school and had roommates in a dirt-cheap house. I also lived on $1 value meals. Of course, the part time job helped too, so the actual cost might have been a little higher, but even if I was working full time, I would still have the same food and housing costs.

20. Logan Mailloux said the following at 9:45 AM on Feb 13:

Apparently, everyone is expecting government jobs to be on the rise, but the military services are always hiring and hiring right now.

A 4 year commitment to the military can provide lots of training in a large variety of career fields and very good experience for just about everyone. This can also help someone who doesn't quite know what career to pursue in life.

21. mindlab said the following at 10:41 AM on Feb 13:

11. Anne: . . . Apparently some Christian men are afraid of educated women. . .

au contraire. As the beneficiary of 6.5 years of college myself, I have gained a great appreciation for the sharpness and openness of mind that graduate eduction develops. A graduate degree is an indication that a person knows how to think hard. That's not threatening, it's delightful.

As for paying for grad school, consider a degree in engineering (no, it's not THAT hard. . . you won't die!). Engineers almost never pay for their own graduate education thanks to TAing, GAing, and industry sponsorship. None of my grad school colleagues added any significant debt in grad school.

22. Trisha said the following at 11:40 AM on Feb 13:

Five classes left to finish my MBA and it only makes sense to put things on hold. Why would I want to add $10k in loans if it does not guarantee a better position in today's slouching market? If I don't have the income to substantiate taking out the loan, then I'm just digging myself a hole.

So, for now, instead of feeling cheated for not finishing up school, I just thank Jesus I have a job that provides for me and my kids.

23. Christina (in green) said the following at 12:10 PM on Feb 13:

I think that the rule of the day is to make sure you have plans of paying off the debt without expecting someone else to do it for you.

Unlike in Canada, you can't clear student loan debt by declaring bankruptcy.

I never expected my husband to pay off my student loans. Unfortunately, by the time I understood what student loans were, I already had to pay them back. I spent all of college highly uneducated about them, thinking they were more like scholarships - yeah, scholarships for good credit =/

I never wanted to work - I went to school because I liked learning. Luckily, my dad talked me into a degree that could get me good work (and was actually enjoyable to learn). My dream has always been husband and kids...that's it. Nothing more, nothing less.

If you have that dream, don't think you'll be happy working to pay off debt you accumulated prior to that when suddenly prince charming comes a long, sweeps you off your feet, and gives you kids to boot. It is incredibly unfair to assume your husband will be doing the pay off.

I'll be out on maternity leave for 12 weeks starting in May...only 6 weeks of it will be paid. When I'm done, I have to leave my son in the arms of grandparents while I go back to a job that I have detested since starting it. I'll be working part-time, but I already know walking away from my baby 3 days a week is going to be torture. I have promised to continue working until my Student Loans are completely paid off.

And after 2 years of paying them off they are FINALLY at $30,000.

Before you go out and get that degree, DEFINITLY make sure it is exactly what you want and that you are getting it in a way that will pay for itself. Don't rack up $40K in debt for a History degree with the hopes of going to law school to bide time practicing law until some guy comes along and marries you. Chances are, he could show up before your even done with your degree and then where will you be? No way to pay off the debt and with a LOT of debt to pay off.

Weigh the consequences of your actions. People don't really talk about that side of pursuing education - especially for women. It tends to trap more than it does "impowering".

24. Megan said the following at 12:16 PM on Feb 13:

I needed to read this article at this very moment in time.

25. Leeandra said the following at 1:05 PM on Feb 13:

1. Only go to graduate school because you want to be in graduate school or because you are going into a professional field--law, medicine, etc. that requires an advanced degree. It's NOT a place to wait out a recession.

2. Unless you are going into a well-paid field that requires a graduate degree--i.e. law or medicine--do not go unless you have a T.A.ship to pay your tuition and give you at least half of your living expenses.

3. Take out only the subsidized loans you are eligible for. That means that the gov't pays the interest on these loans while you are in school. Do not spend this money. Put it in a high-yield savings account. This money is there so that if the excrement hits the fan, you will be less likely to run up credit card debt paying for basic food and housing. The interest rates on subsidized loans are capped at 8%, whereas credit cards can charge you as much as 49% interest (in California).

4. Pay off your loans ASAP when you graduate.

5. Do not go to law school unless you are called to practice law. Seriously--it's not a place to be just because you are a bright English or History major and are not sure what else to do with your degree.

26. Anne said the following at 1:55 PM on Feb 13:

What I should have said is that you try to discourage women from getting master's degrees. This is not a far stretch considering that you put a lot of focus on women only being at home.

27. Kari said the following at 2:02 PM on Feb 13:

See,and my family is very poor, so my undergrad degree is my responsibility to pay for.... and unless I get a Master's I will not by able to make enough to pay back the undergrad loans. So I am sort of stuck going to graduate school! Also, I have heard from many individuals that to be really marketable in the world today, graduate level preparation is essential. Plus I want to be a therapist, so I have to go anyway!

But good gracious it's scary to take on that kind of debt, while hoping for nothing more than being a stay at home wife and mom in the next 10 years!!

I'm going to apply at CSU for he Social Work M.A. and the Occupational Therapy M.A. (I've been working in Occ therapy for 4 years now) and then at UNC for a master's in education-- and see who will have me.

28. EconNicole said the following at 2:12 PM on Feb 13:

I'm in graduate school currently. It's definitely not the place to ride out a recession. Actually a lot of state schools are accepting less applicants. My school won't be accepting any PhD students in to the business school this year (of course, our tuition is paid for and we have a fellowship as GA so there is a lot of money invested in us). But overall I hope students realize that even if they have the grades a lot of grad programs are cutting back because of finances. Especially if you're a student looking for an assistantship. Which increases the money these students will be borrowing. Also as cost of living increase the amount paid for assistantships seems to get smaller and smaller (four years we don't get a pay raise, despite inflation that may happen over that time). So that increases the likelihood of students needing to take out debt.
I for one would not have chosen to continue onto grad school if I had any debt or was going to go into debt for it. But that's cause I hate debt. Thankfully through scholarships, working, and now an assistantship I was able to do it debt free.

29. Tamara (from Canada) said the following at 2:46 PM on Feb 13:

Christina (in green) #23 said ...
"Unlike in Canada, you can't clear student loan debt by declaring bankruptcy."
--------------------------------------
Actually, declaring bankruptcy in Canada still leaves you with your student loan debt. You will still have it after that. I believe there are certain very specifc circumstances where this may not be the case, but overall, your student loan debt goes with you even after declaring bankruptcy in Canada.

30. Kari said the following at 2:51 PM on Feb 13:

Yeah pretty much the only way to get rid of student debt (short of paying it off) is to die.

In fact, that is a significant bright spot in my life-- if I happen to keel over in the near future,not only do I get to be in heaven with the Lord, BUT my student loans will be forgiven!

God is good.

31. B. Marie said the following at 3:48 PM on Feb 13:

I want to be a librarian, and I applied to grad school last year but was rejected. I am so glad the Lord closed that door, because it was the best thing that happened to me. I am taking a year off, working at a library and gaining work experience before I go to grad school in the fall. Going to grad school really depends on your motives. I am pursuing my dream job, and to do that, I need a masters. Otherwise, going back to school would be pointless.

32. Leah said the following at 3:48 AM on Feb 16:

I was under the impression that financially, it's pretty tough to get through tertiary education in the US. I thought it was really expensive over there, you have to get loans and you pretty much have to work your way through it unless you get a scholarship. Wouldn't this make postgrad just as tough as getting a job? How do you pay for it, how do you live, if you can't get a loan and you don't have a job?

It's different in Australia because you have the option of using HECS-Help (Higher Education Contribution Scheme) where you don't need to pay any tuition fees until you graduate and start earning $35k a year. Sure you have to pay for your text books and stuff, but not tuition fees. It means that if you're independent, you need only work enough hours for you to live off. And for those lucky enough to live at home (like I did) or your parents support you, you don't need to work at all. (Unless of course you have expenses like a car etc. I lived 1km from my university so I just rode my bike every day). And that's all on top of the fact that your average three year undergrad degree costs between 20k and 35k. So financially, it's heaps easier to get a tertiary education in Australia than the US.

(The astute of you would have noticed that a woman aspiring to be a stay-at-home mother can get, essentially, a free tertiary education in Australia. She'll accumulate a HECS-help debt that she needn't pay off until she [not her husband] is earning 35k a year. If she's at home with kids, she doesn't need to ever pay it off! It's also a debt that dies with you.)

33. BDB said the following at 7:59 PM on Feb 16:

Leah,

Financial aid is definitely complicated in the U.S. Most people can qualify for government-subsidized loans, especially for graduate school. Though, recent legislation has made them much less profitable fr private companies, creating a large problem with the credit crunch this year.

Some schools also have large endowments they use to fund financial aid grants. They may do this by providing scholarships to poorer students with high test scores and charging students with low test scores full price.

The undergraduate institution I went to gave free tuition to all national merit scholars. At my college graduation I realized that fully 10% of my college class were NMS, compared to about 1/2 of 1% of the people who take the test. Most of the people who took advantage of the scholarship couldn't afford a private university without it. And that significantly raised the "average" test score for the university.

I was only a "commended" student, but I got a big enough scholarship to make it cheaper than going to a public university. It met my prayer request that God would get me into a private college, out of state, and pay for it.

(Of course, I had to accept going to a school I never would have considered if I hadn't realized it met my prayer request exactly. Sometimes God forces us to bend.)

34. Leah said the following at 5:02 AM on Feb 18:

BDB- thanks, that's interesting :) Still glad I'm doing my tertiary ed in Australia!