Finance professors: Grad school a good option

William Evans

 

The plunging stock market should alert students to the uncertain economic climate lying beyond graduation, perhaps enticing them to stay in school for a graduate degree, according to Robert McLeod, professor of finance.

“The job market is able to hire students with master’s degrees in many disciplines for not much more of a premium than what an applicant with a bachelor’s degree would earn,” he said.

Further education beyond a bachelor’s degree does not have to be a student’s only resource, however.

Entrepreneurship can be a useful tool for students to transcend less desirable job opportunities awaiting them out of college because of the stock market collapse, said Robert Brooks, professor of finance.

Referring to entrepreneurship as economic liberty, Brooks said American students have the power to profit from an original idea that is marketable.

“I’m actually very optimistic because America has a high level of economic liberty,” he said. “People can go out and create companies and jobs. Don’t ever underestimate the power of liberty to generate wealth and create jobs.”

Uncertainty in the domestic job market is the culprit behind plummeting stock values, Brooks said.

“The key thing to realize is that the stock market is an indicator,” he said. “The stock market is always forward looking. The value of stocks is driven by the expectations of the future and the risks related to those projections.”

European governments that are drowning in debt are also responsible for the stock market crashes on Wall Street, McLeod said.

“The stock market is based upon economic news on both domestic and global fronts and a lot is happening in Europe concerning sovereign debt,” he said.

In particular, Portugal, Italy, Ireland, Greece and Spain are suffering from overwhelming debt, and that uncertainty in European markets is spilling over into the American market, he said.

Students could learn a lesson from the near insolvency of the European governments.

They should be wary of taking on debt to finish college because even the unemployed have to repay their debt, Brooks said.

“Students should pay attention to the business climate when thinking of taking out student loans because they have an obligation to pay back the debt and might not be able to because of the uncertain job market,” he said. “Borrowing money is kind of like alcohol. It’s very addictive.”

Whether shouldering student loans or not, students can feel confident in the University’s competence to provide a quality education despite the instability of Wall Street and the cuts in state funding for the University, said UA spokeswoman Cathy Andreen, in an emailed statement.

“Like many institutions across the country, UA has experienced a significant decrease in state funding in recent years,” she said. “During the past three years, UA has absorbed a $62 million reduction in state appropriations without laying off any faculty or staff or cutting any programs, and no layoffs or program cuts are planned.”