The Economy Sucks. Should You Go Back to School?

Several of my coaching clients are in the midst of changing their careers and lifestyles as a result of layoffs, cutbacks and other negative economic impacts. The question that keeps coming up is “Should I go back to school?”

The answer is a complicated one no matter where you are in your career. It gets even more complicated when you factor in the economy, lifestyles, families, emotions, egos, history and work experience.

My clients, and others like them, are really wrestling with this question. Going back to school seems like a great idea, especially if you feel that you’ve maxed out the opportunities you can land using your current skill set and education. But, the decision comes at a high price–the cost of tuition (and the inevitable debt, especially now that there are fewer lenders and higher interest rates), the loss of wages, missed opportunities and the very real possibility that the market will not be that much better two or three years from now, leaving back-to-schoolers with little ROI–saddled with student loan debt, only a few additional job opportunities and no real gains in salary.What to do? I decided to do a little research on the subject.

A Canadian study found that male students graduating during an economic downturn earn approximately 10% less than boom-time grads for the first 8 years of their careers.

Another study by Lisa Kahn examined the impact of the 1982 recession on U.S. undergraduates revealed that every percentage-point increase in the unemployment rate at graduation translates into 7%-to-8% initial wage loss. Kahn found that the gap between what the grads might have earned and what they earned due to the recession took at least 13 YEARS to close. She also found that recessionary grads had difficulty switching to better jobs post-recession.

Paul Oyer, an associate professor at Stanford University, reviewed the job histories of Stanford University MBAs who graduated from 1960 to 1995 and found that those attending during a bull market were more likely to pursue careers in investment banking, while those graduating during a recession were more likely to pursue careers in other industries. The result was that recession-time grads earned $1.5 million to $5 million less than their bull-market counterparts.

So, what does it all mean? Should you go back to school or not?

Each of the studies found that graduating during a recession is bad for your career (or career change), but only initially (if you consider 8-10 years “initially”). So, that might lead you to believe that it is a bad time to go back for that Masters degree or MBA, or even to finish your BA.

Wrong! The studies also found that you can mitigate and, eventually, overcome the negative impact of an economic downturn. Here’s how.

Don’t graduate during a downturn - Who knows how long this’ll last, but 2-3 years from now we may be in recovery
Change jobs! - Each of the studies found that you could close the wage gap by changing jobs and industries. So, even if you settle on a lower-paying job in a lower-paying industry initially, jump ship as soon as you see daylight.
Don’t quit your day job - If you can, stay employed while you get your new degree or certificate. It’ll decrease your debt, maintain your income, keep you in the job market and, with any luck, improve your post-recession job prospects.