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As artificial intelligence restructures the workforce and reduces the number of entry-level opportunities, an alternative is emerging for recent college grads struggling to find jobs: going back to school.
Nearly 78% of those who are considering graduate school said they plan to enroll in a program within 12 months, according to a new Jenzabar/Spark451 survey, up from 69% who expressed similar plans a year earlier.
Typically, enrollment in graduate school increases during economic recessions as workers take steps to “skill up” or move to another industry with better career prospects or pay.
“We know that there is a trend to go back to school to re-skill during a recession,” said Kristin Blagg, a principal research associate at the Urban Institute, a think tank. In times of economic uncertainty, “people shelter in higher education,” she said. “It makes sense that it’s counter-cyclical.”
But this current economic cycle is not like the others.
By many measures, the labor market is still relatively strong. The U.S. economy added more jobs than expected in March, according to the Bureau of Labor Statistics. The overall unemployment rate edged down to 4.3% — although, for younger workers, ages 16 to 24, unemployment was 8.5%.
And yet, consumer confidence sank to a record low in April as fears mounted over the Iran war’s impact on the broader economy. “That is something that could push people to think about other opportunities,” Blagg said.
Prior economic downturns have pushed people toward graduate school as a way to wait out a bad labor market and build credentials in the meantime, according to Christopher Rim, president and CEO of college consulting firm Command Education.
“What we’re seeing right now amongst our clients is actually the inverse of that dynamic,” he said. Although students are considering graduate school, many are also worried that the professional landscape will be even harsher in a few years.
“Students are approaching graduate school with extreme caution,” he said. “Recent college graduates are generally uncertain about whether a graduate degree is worth the investment, especially given how fast the labor market is shifting.”
A number of CEOs have recently pointed to AI as justification for layoffs and hiring changes.
A graduate degree can be ‘an insurance policy’
“Concern about getting a job right out of college is leading to more interest in graduate school,” said Eric Greenberg, president of Greenberg Educational Group, a New York City-based consulting firm. “It’s even more magnified because it’s not only about what’s going on today, but what is going to happen in the not-so-distant future.”
“Graduate school is much more of a hedge now,” Greenberg said. “If somebody has more education, more knowledge, more of a skill set, they will typically get a better job,” he said. “It’s kind of like an insurance policy.”
Enrollments in graduate programs remained flat in fall 2025, although private nonprofit institutions notched a slight decline, according to a January report from the National Student Clearinghouse Research Center.
However, that could change in 2026, the Jenzabar/Spark451 survey found.
As the job market becomes more challenging for young adults, “graduate programs are seen as strategic tools for career advancement, not just academic pursuits,” the higher education marketing firm said in its report. At the end of last year, the company polled more than 1,300 adults who are actively considering or are already pursuing graduate school.
In choosing a program, the most important factors included career-based resources and outcomes and hands-on opportunities such as internships, according to the survey.
To that end, “graduate institutions must differentiate themselves and show value right out of the gate,” Mike McGetrick, vice president of Spark451, a division of Jenzabar, said in a statement. These programs must “demonstrate real, tangible return on investment,” McGetrick said.
Grad school can lead to higher earnings, more debt
Going back to school typically pays off. Workers with master’s, professional or doctorate degrees have the highest earnings overall and experience lower levels of unemployment, according to the Bureau of Labor Statistics.
But in addition to the economic payoff, there is also a higher cost — and often, debt.
“Graduate school is an investment,” Rim said. “This market is pushing students to a more general understanding that graduate school is not a casual next step, but should be an intentional and strategic stepping stone toward clear professional goals.”
Of 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 Work, Education, and Labor division. For a professional degree, the median is $173,180. By comparison, bachelor’s degree holders have about $27,300 in education debt.
“Up until recently, you could borrow up to your cost of attendance [for advanced degrees], so we had people borrowing quite a lot,” Blagg said. That will change for future cohorts, she added.
New borrowing limits for 2026 under President Donald Trump‘s “big beautiful bill” are an unknown factor, Blagg said. “We don’t really know yet what that will do for overall debt.”
Starting this year, the legislation caps the amount of federal loans students can borrow for graduate school at $100,000 over a lifetime — and sets a lifetime loan limit of $200,000 for professional programs, such as medical, dental or law school. Grad PLUS loans will also be eliminated entirely.
Those changes go into effect for new borrowers on July 1.
