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As artificial intelligence reshapes the workforce and reduces the number of entry-level opportunities, returning to school is an emerging alternative for recent college graduates struggling to find work.
Nearly 78% of people considering graduate school say they plan to enroll in a program within 12 months, up from 69% of those who indicated similar plans a year ago, according to a new survey from Jenzabar/Spark451.
Graduate school enrollment typically increases during recessions as workers seek to “upskill” or move to other industries with better career prospects and pay.
“We know that in recessions people tend to go back to school to relearn skills,” said Kristin Bragg, a senior researcher at the Urban Institute think tank. In times of economic uncertainty, “people take refuge in higher education,” she says. “It makes sense that it’s countercyclical.”
However, the current economic cycle is different from other economic cycles.
By many measures, the labor market remains relatively strong. The U.S. economy added more jobs than expected in March, according to the Bureau of Labor Statistics. The overall unemployment rate fell slightly to 4.3%, but the unemployment rate for young workers aged 16 to 24 was 8.5%.
Nevertheless, consumer confidence fell to an all-time low in April as concerns grew about the impact of the Iran war on the broader economy. “This could make people think about other opportunities,” Bragg said.
Christopher Lim, president and CEO of university consulting firm Command Education, said previous economic downturns have encouraged people to wait out the labor market and go to graduate school as a way to build qualifications in the meantime.
“What we’re seeing now among our customers is actually the opposite of that dynamic,” he said. As students consider graduate school, many worry that their professional situation will become even more difficult in the next few years.
“Students are approaching graduate school with great care,” he said. “Recent college graduates are generally unsure whether a graduate degree is worth the investment, especially given how quickly the labor market is changing.”
Lately, many CEOs have pointed to AI as a reason to justify downsizing and hiring changes.
A graduate degree can be an “insurance policy”
“Concerns about getting a job right out of college are driving interest in graduate school,” said Eric Greenberg, president of Greenberg Education Group, a New York City-based consulting firm. “It expands even more because it’s not just thinking about what’s happening today, but also what’s going to happen in the not-too-distant future.”
“Graduate school is much more of a hedge now,” Greenberg said. “If someone has more education, more knowledge, more skill sets, they’re usually going to get a better job,” he said. “It’s like insurance.”
Enrollment in graduate programs remained flat in fall 2025, while private nonprofit institutions saw a slight decline, according to a January report from the National Student Clearinghouse Research Center.
But that could change in 2026, a study by Jenzabar/Spark451 found.
As the job market becomes more difficult for young people, “graduate programs are viewed not only as academics but also as strategic tools for career advancement,” the higher education marketing firm said in a report. Late last year, the company conducted a survey of more than 1,300 adults who were actively considering or already enrolled in graduate school.
According to the survey, the most important factors when choosing a program included career-based resources and outcomes and hands-on opportunities such as internships.
To that end, “graduate institutions must differentiate themselves and demonstrate value right from the start,” Mike McGetrick, vice president of Spark451, a division of Genzabar, said in a statement. These programs need to “demonstrate a real, tangible return on investment,” McGetrick said.
Going to graduate school can increase your income and increase your debt.
Returning to school usually helps. According to the Bureau of Labor Statistics, workers with master’s, professional, or doctoral degrees earn the most overall and have lower unemployment rates.
But in addition to the financial rewards, there are also higher costs and often debt.
“Graduate school is an investment,” Lim says. “This market is driving a more general understanding among students that attending graduate school should be an intentional and strategic stepping stone toward a clear career goal, rather than a casual next step.”
Among those with loans, the median total debt for master’s degree graduates is about $54,800, according to an analysis of federal data by the Urban Institute’s Department of Labor, Education and Labor. For professional degrees, the median is $173,180. By comparison, those with a bachelor’s degree have approximately $27,300 in educational debt.
“Until recently, you could even borrow money to pay for attendance (to get an advanced degree), so some people borrowed quite a lot of money,” Bragg said. That will change in future cohorts, she added.
Bragg said the new borrowing limit in 2026 under President Donald Trump’s “big, beautiful bill” is unknown. “We don’t really know yet how that will affect overall debt.”
Starting this year, the law limits the amount of federal loans a student can take out for graduate school to $100,000 over a lifetime, and sets lifetime loan limits at $200,000 for professional programs such as medicine, dentistry and law school. Grad PLUS loans will also be completely phased out.
These changes will be effective for new borrowers from July 1st.
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