How does a recession affect students? Plus 10 survival tips
Is there a good time and a bad time to graduate?
For a student who enters the job market right after college (with no prior experience), the answer is “yes.” It is certainly “yes” if the student is over-dependent on the degree she has earned to get a job.
For all fresh graduates, regardless of their major, the year 2008 was probably among the worst years to graduate. The Great Recession of 2010 was just round the corner, and many sectors had started showing signs of falling apart. Most degrees were nearly worthless, and fresh graduates were forced to accept just about any job they could find.
The ill-effects of the Great Recession didn’t last for just two or three years for these fresh graduates. It had such far-reaching effects for the US and many other economies that those who graduated during those days will probably take a lifetime to make good some of their career setbacks, if at all they manage to catch up some day.
Even by 2018, a decade after the Class of 2008 had graduated, when the US economy was doing much better, the recession curse on fresh graduates had not yet been lifted.
There were no real rise in starting salaries, and the Class of 2018 was making only $50,000 a year, about the same starting pay as the Class of 2008.
The comparison above shows the lasting effect a recession can have on students leaving college, particularly on their starting salaries.
But come any recession, a list of worries bigger than a small starting salary threatens fresh graduates. To begin with, there are much fewer jobs and more widespread unemployment.
There is great pressure on new graduates to take up any job, regardless of their interests, education, and aspirations.
They feel compelled to opt for further education because they feel higher skills might fetch them jobs and also simply because there seems nothing else to do.
They face a lack of financial support from scholarships and aid from graduate schools and the state because of the competition for such support.
They end up taking student loans (the Great Recession of 2010 raised student loan to $1.5 trillion from about $670 billion two years earlier).
Their families are not able to support them financially because one or more family members are unemployed because of the recession.
Given the size of student loans and their inability to make regular, substantial repayments, recession graduates end up carrying the debt burden for many years; for some, it often proves to be a life sentence.
How does a recession affect students?
Long-lasting effect of loans
A financial portal article tells the story of one such student, a bachelor’s degree holder in automotive engineering, who joined a for-profit college to improve his skills and secure a well-paying job, following the financial collapse that started in 2008.
Then 22, he took a college loan, graduated with an advanced degree, and eventually got a job in the automotive industry.
But the college bill was just not worth it: he already knew much of what was taught and was unable to launch the career of his choice. Now with a family, a significant part of his student loan remains unpaid.
A woman who was 22 at the start of the financial crash enrolled for a master’s degree in public service management to get a job with a higher salary. Her dream came true and she was hired by the municipal government.
However, she has an unpaid loan of $100,000 even as she and her husband make plans to buy a home. According to a report, some students with huge home loans might be able to repay the loans only in the next 20 years.
The troubled times that stalked millennials (born 1981-1996) when they were high-school or graduate students or undergrads will continue to trouble them or worsen if 2020 brings in another recession as predicted by a few private-sector economists.
More than a million millennial women are entering motherhood each year in the US, and they are yet to pay off their own education debt, to say nothing about planning for their children’s future.
Higher degrees no guarantee
The Great Recession of 2010 saw a rush of fresh, jobless graduates to enroll in college hoping to acquire higher degrees and scale up their chances of getting better-paid jobs.
College enrolment at for-profit colleges increased from 2.5 million in 2008, to three million in 2009, 3.5 million in 2010, and four million in 2011, as public colleges could not meet the heavy demand for admissions.
However, students who went to graduate schools that were less than topnotch found their degrees nearly worthless. Even with a graduate degree, they could not find jobs to start repaying their heavy student loans.
The crisis continued for many years, and even in 2016, the average loan amount for graduate students was over $70,000 and undergrad students over $60,000 in the US.
Some students forego the chance to graduate early and hold off, waiting for a recession to pass. But when they realize that the recession is not going away soon, they feel they have no option but to finish college and join graduate school, hoping to wait it out, once again.
But even with a higher degree and a good skillset, many are unable to find a job while being saddled with a heavy debt.
Tuition hike
Another problem that students faced during the Great Recession was that public colleges, which were faced with government aid cuts, were forced to increase tuition.
The share of revenue brought in by tuition rose from just over 35 percent (2008) to over 40 percent in 2010, to nearly 45 percent in 2011, and to almost 47 percent in 2013.
Therefore, during a period of financial crunch and unemployment, students had to pay more for graduate college or higher education.
At the same time, colleges withdrew some courses that they thought were “not job-oriented,” robbing students of choice and their aspirations.
Taking advantage of the situation, at least a few for-profit colleges lured students, offering “sure-fire” courses, which, they said, would fetch them jobs right after college. They charged fees higher than those at public colleges.
Students who fell into the trap had to cough up higher loan repayments and were faced with poor results from their education effort.
The trend of students taking loans went up during the recession, but even after the recession had eased, when colleges began to get more funds from the state, there was no proportional drop in tuition, and fees continued at much the same level as during the recession.
Smaller endowments for colleges
Endowments to colleges also take a hit during a recession. A survey of 800 public and private schools found that endowments decreased by an average of 23 percent during the Great Recession years in the US.
Even “well-off” universities faced trouble during the recession: for example, Cornell faced a 10 percent budget shortfall and Dartmouth had to lay off teaching staff.
Public schools also suffered and faced 24 percent fall in endowments. The fall in endowments affected student scholarship and other financial aid, and brought down the number and quality of programs such as research and liberal arts, and student services.
Left behind by recession
A good number of students who were able to face the recession, survive, and even excel in their professions rue the fact that they graduated “at the wrong time”—during a financial crisis. They feel that they could have done even better had the economy been up and running.
Ten years after graduating from a state university, a 30-year-old student, who is now well-entrenched in consulting, is managing his own software team. He is able to enjoy some of the luxuries of good living and owns a good house.
However, he feels that he would have been closer to the top in his company hierarchy had he managed to start off in a higher position right out of college during the Great Recession.
But he probably also thanks his stars: during the recession, one in two grads ended up doing jobs that didn’t need a degree, instead of one in three in other years, says a study by the Federal Reserve Bank of New York.
Many couldn’t even find a job. According to a survey by the US National Association of Colleges and Employers, the hiring of new grads fell 22 percent in the spring of 2009, the largest fall in over a quarter century.
Most graduates who launched their careers during the recession will probably take years to catch up with the salaries of those who graduated when the economy was doing well, 10-15 years in many cases, says an economics professor, referring to research by the University of California, Los Angeles.
Recession grads are forced to take up low-paying jobs initially before they find higher positions, which could take up to five years. Then they will have to start climbing the job ladder.
A top official at a recruitment firm agrees that even eight or ten years after graduation, recession grads are not where they ought to be—in senior positions.
But some of these grads managed to improve their place in life by acquiring new skills that more “important” jobs require.
Some start to thrive, eventually
A New York resident and fresh bachelor’s degree holder in animation had to continue her job as supermarket cashier and live with her parents after graduating during the recession. But her luck turned.
After an internship at a studio, she managed to get a full-time job and later moved to another studio where she was able to apply what she had learned, working on storyboards and animations. She now owns a flat and hopes to advance her career.
Recession postgraduates, not just grads, also face trouble launching their careers during troubled times.
A postgraduate in architecture took eight years to establish himself in his chosen field. During his years hunting for a job, he worked as a real estate agent, cinema hall and theatre attendant, insurance agent/seller, and night-club dancer.
Finally, he is now a designer and planner, a position usually achieved by grads before and after him sooner and with only a bachelor’s degree. He is saddled with a student loan of $300,000. And he has started climbing the loan mountain only now, he says.
Health, job satisfaction
Other than professional careers, how does a recession affect young people?
A study in Europe has made the interesting finding that men graduating during a recession were healthier in their later life.
Why?
In their younger days, because of their poor finances, they adopted, or were forced to adopt, healthier lifestyles, away from alcohol and tobacco consumption.
However, women graduating during a recession married and started a family earlier, not only leaving them out of the workforce for even longer but also reducing their chances of living longer, according to some research.
Despite the widespread pity over the ill-luck of recession graduates, there is one thing in which they have an advantage: job satisfaction.
A study by a professor of Emory University’s Goizueta Business School found that recession graduates who enter the workforce during a downturn are more likely to count their blessings and enjoy greater job satisfaction than crib about real or imagined “missed opportunities.”
That’s one silver lining for debt-burdened recession graduates.
How to prepare for a recession
10 Tips to survive a recession
How can students who are thrown into the job market with a recession looming and with the economy changing under automation and disruptive technologies survive?
Here are 10 tips to prepare for a recession.
1. Broaden your focus
Don’t wait for the perfect opportunity to come by. If you are interested in health administration, for example, think of areas even vaguely related areas where you can get a toehold.
Consider viable options so that you are not out of the job market for too long and lose your skills.
2. Find a stepping stone
You may not find an ideal job, but you can find a stepping stone that may lead to your dream job before long.
For example, if you are an MBA and want to get into investment banking but can’t find a job, look for an opening as a corporate financier or financial analyst, which may lead you to your goal.
3. Be proactive
“Be more strategic and proactive about your first job search,” is good advice that you should heed. The truth is that many job seekers will need some heavy family connections or other similar advantages to get their foot in the door.
But even if you have connections, it is a good idea to keep networking. A good word from an employee who can recommend you works wonders. Cultivate relationships through networking.
4. Get an internship
Instead of “doing nothing” after graduation, volunteer to work for free in the sector you’re interested in, or try to bag an internship. You will gain useful insights and also make some good connections.
5. Use career counseling
Career coaches are available in schools offering their services for free. Free and paid services are also available outside the campus.
Job seekers should go to them, not only to identify job openings, but also to become more self-aware and aware of potential employers and industries.
6. Build up resources
Prospective job candidates could also attend conferences and panel discussions and try to meet the speakers and other experts afterwards.
They are often good resources in your job search once you prove that you could be an asset to any organization. If you make mature and insightful comments and posts on social media, you will be noticed by industry experts.
7. Do some research on funding
Students should actively start looking for scholarships as soon as they finalize their graduate-school plans. There is no putting off this search since the demand for scholarship is the highest during a recession.
Graduates should bear in mind where funds for further education are going to come from. Is it from a scholarship or grant? Will a close relative spare the money? Will a bank be ready to extend a loan?
8. Think out of the box
The Great Recession has changed the job market landscape in some significant ways. Jobs outside the corporate world, such as government and not-for-profit sectors, deserve a second look. So also jobs with proven, traditional corporate names.
Keep in mind that various sectors are hiring candidates with a mix of majors: for example, healthcare is recruiting tech majors for entry-level roles.
Sectors that cater to the baby-boomer generation and millennials do well even during a recession; for example, healthcare and IT goods/services. They are most likely to recruit.
9. Position skillset above graduate major
An online social platform for professionals found that students would be well-advised to focus on their skillset rather than their major during their job search.
For example, a writer may be recruited by a tech firm and an engineer by a fashion house. What matters to an employer is whether a candidate can do the job.
Communicate your skills effectively and say how you can contribute to the company’s bottom line.
10. Be wary of underemployment
Students sometimes don’t give adequate importance to their first jobs, thinking better jobs will come their way.
However, if they accept a first job much below their skillset and qualifications, they may end up remaining underemployed for quite a few years, according to a study by a workforce analytics firm.
As the job market becomes a difficult place to survive, job applicants, particularly freshers, should remain adaptable and resilient. They should never lose the self-belief that they can offer something valuable to the world.
Recessions don’t last, but tough guys do!
Also read:
– How important are college GPA / grades in getting a job?
– 10 Ways to improve your chances of getting a job after college
References: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13