Young adults take on debt to pay for better future
A bachelor's degree in international politics could get one far, correct? That's what my friend Miriam thought when she graduated from George Mason University in spring 2007. Needing to unwind after an arduous school year, she opted to work as a skin-care product specialist at a high-end department store during the summer, living a 20-something female's dream life filled with hefty discounts on designer handbags and shoes, free cosmetics, short work days, all while earning $25 an hour.
She bought a few diamond bracelets, a new car, stocked her closet to the brim with Gucci and Prada, sent out job applications in between--and before she knew, a year had passed. Miriam had everything she wanted, except for the job she fantasized about in countless all-night study sessions.
Positive her calling didn't involve anti-wrinkle creams and used cotton balls, Miriam took out a $30,000 loan to pursue a master's degree in public administration from George Mason. Coveted by individuals yearning to work in the government sector, this broad degree offers its recipients a much higher probability of finding a well-paying job (quickly) than a bachelor's in international politics.
Last month, Miriam joined thousands of 20-somethings who entered graduate school to obtain a better future and to ride out the recession. 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."
And her situation isn't unique.
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."