Help, My Degree Is Underwater

Education pays. That's the lesson of study after study on the income effects of going to college and graduate school. In general, you make more money if you get a higher degree. Harvard economists Claudia Goldin and Lawrence F. Katz have written [2] that since 1980, "[t]he increase in the relative earnings of college graduates and those with advanced degrees has been particularly large."

The studies that show this finding typically crunch broad swaths of data. They look at the census, or other large population samples, and show a positive correlation between income and years of education. This means that college and graduate school are generally a good bet. But it doesn't tell you that every single degree pays off financially at every single point in time.

This insight helps me understand the hundreds of e-mails I got in response to my question [3] about how the recession is affecting twentysomethings' decisions about graduate and professional school. (I mention that there were hundreds to absolve myself for not answering them individually. Your notes were heartfelt and moving; I read them all, and please forgive me for a lamely collective thank you!) I heard from twentysomethings in law school, business school, Ph.D. programs in the sciences and the humanities, and master's coursework in a variety of subjects. And if more school is usually an unbeatable bet in the long term, it is not looking that way to a lot of students in the here and now. As Jonathan, a college graduate in North Carolina who had been working at a used-book store, puts it, "I have a B.S. in sociology, and its value bears a strong similarity to its initials."

To be sure, plenty of students appreciate school as a refuge from the dreaded job market. "It's a brilliant safe house and one I would gladly (if naively) choose, if I hadn't just finished my Ph.D. dissertation last month," writes Laurel, whose subject is art history.

Despite the research mentioned above, Ph.D.s like Laurel won't see an immediate payoff. She is lucky, compared with her peers, because she has no debt for all her years of school. "For the past seven years, someone has paid me to be a graduate student," she wrote. But if she doesn't owe money, she hasn't saved any, either. This is, of course, the traditional Ph.D. penury: Live like a church mouse, pore over old documents in your garret (or in Laurel's case, on fellowships in Venice, Italy, and the Adriatic Coast), and emerge with the credentials for an academic job. The problem is that this is not the year to graduate. "Many of the academic jobs that I applied to were cancelled," Laurel writes. "I've been scouring Craigslist but thus far I haven't found a position that requests familiarity with obscure art historical literature from the 18th century written in Serbo-Croatian."

Now maybe we shouldn't worry too much about Laurel. She sounds smart, and so far she's been successful. Maybe the university hiring freeze will prove to be a temporary bump along the road, and in a year or two she'll move into the art history job she trained for. But as universities offer more adjunct teaching and fewer tenure-track gigs, I can understand the title of this January piece in the Chronicle of Higher Education: "Graduate School in the Humanities: Just Don't Go [4]." I can also understand Laurel's consternation as she looks ahead. "I am hurdling toward being the saddest type of graduate student—the one who has finished and is at a loss for what to do next. I'm going to be the one sitting on the front steps of that Ivory Tower with my elbows on my knees and my chin in my hands just begging to be let back in."

According to my inbox, the recession means that in the short term, this is not merely a problem in the humanities, plaguing people who devote themselves to tiny, impractical bodies of knowledge. I heard, for instance, from broke or worried Ph.D.s in bioengineering from UC-Berkeley and UC-San Francisco ("It's wrenching to have a Ph.D. in engineering and not even earn my rent in a bad month") and physical sciences at Stanford ("I can stick around this place for another 3-4 years, the pay is bad, the hours are shit, but at least I know that I'm not going to get laid off.")

More anxious are the twentysomethings with professional degrees that were supposed to help them find work but aren't. Gordon, who is 29, has an undergraduate degree in computer engineering from Boston University, three years in IT, and an MBA and a master's in information systems. How much more sturdy and practical can you get? But after a year and a half, he lost the job he got after graduation. He has $60,000 in student loans even though he had full scholarships for both undergrad and grad school (living expenses). That comes out to $500 a month for the next 10 years. "I would describe my current state of fear as a dull persistent thing that colors all of my life decisions," he writes.

Suddenly, it seems to me that there is a real possibility that I, like tens of thousands of others, am holding onto a degree that is actually underwater. Look at student loans, the opportunity cost of taking two (business) or four (law) or eight (medicine) years off of your working life, add in a horde of other people with the same qualifications as you who are competing for a handful of available jobs and it's easy to see just how much the job market in these professions looks like a bubble that is about to burst. [Actually, law school is three years.]

Economists would dispute this. "When things recover, it's going to be the highly skilled who are still in greatest demand (as has been true for the last three decades)," says David Autor of the Massachusetts Institute of Technology. "So, for someone considering engineering, medicine, computer science, economics, law, biology, etc., I would say 'go.' " Autor says the only question mark is whether Gordon's degree, the MBA, will retain its previous value given the financial crash. For everyone else, "The recession makes education look like a better deal than ever because the opportunity cost of investing in your human capital has not been this low in quite some time."

Gordon might counter, yeah, but it sure feels rotten now, and who really knows when and how this downturn will end? It's the grim short term and the uncertain longer term that is grinding graduates down, I think, even if in statistical terms, they should be fine.

I also heard from law school graduates with $200,000 in debt who wonder what they were thinking as firms downsize and implode. "It is a nightmare," writes Benjamin, who got laid off a few weeks ago without a day's notice. He has moved back in with his parents—until he leaves to go teach English in Korea. "The pay is decent and the expenses are covered. I highly recommend other college graduates who are in my position look into this. But, my God, I have to leave the United States of America. What in the world happened?" (Autor would tell him to relax: "As for the law degree being underwater: Lawyers may get their shoes wet during the recession, but high school grads can't even see the surface they are so far down.")

Then there are the master's degrees. I've wondered whether some master's programs are a bit of a scam, moneywise, since students often have to pay for them. Tamara, who has a master's in physician assistant studies, picked her degree when she saw it ranked high in a CNN poll of jobs for the future. She is working, but given her $200,000 debt, she says, "It is hard for me to say at this point whether I made the right decision to go to graduate school. Although I only made $29,000 while working in a research lab, we lived debt-free, owned a nice home, and I had plenty of free time to spend with my family. … I hope one day to look back on my decision to pursue graduate education with pride, but now the feeling that overwhelms me is regret."

In the same boat: A guy with a master's in international relations is working at a supermarket and just went on Medicaid. And what about the people whose degrees and passions lie along paths that are eroding beneath them? As in, oh, the dear journalism students. Sam writes that when he started journalism school at the University of Missouri in 2004, "I was OK with the low pay expectations and was fully willing to start at the bottom of the food chain." He promptly got a job at the local paper "and just as promptly, was laid off." He's working at Applebee's. "My question, I suppose, is this: For a person who had dreamed of covering sports for a newspaper (and developed few web-based skills to supplement his writing skills), what is the best option? Go back to school in a different area (which I can't afford), keep pushing my resume to those who aren't hiring anyway, or give up my dream for something more plausible?"

As some of my e-mailers recognize, their dilemmas are those of the relatively fortunate. They are young. They have advanced degrees. As Sam wrote, "It should be noted that I'm a very lucky, healthy, happy 23-year-old male who, aside from having little money and having caught a bad break on his choice of careers, has nothing to complain about." For a dose of perspective, I'll include an e-mail from Dani, who is 28, lives in Chicago, and couldn't go to college right out of high school. She works in a warehouse office and will finally graduate in May with a two-year associate degree for which she scrimped and borrowed and is "fighting tooth and nail for." She can't see how she can afford to go on in school, and she points out that "for those of us not privileged enough to have [a college degree] being seen as not as valuable as someone who is 'smarter' than us because they have a degree puts us behind in the job market even further. We are already worried about our futures, and the thought that this economy or even one bad thing happening [could] disrupt our paycheck-to-paycheck lives, is more than terrifying." It is bad to have a degree that you fear is underwater. But it's still worse to have no degree at all.