Is grad school still a smart choice?

A new report on graduate school enrollments by the Council of Graduate Schools made a surprising finding: For the first time since 2003, new-student enrollment in graduate programs fell in 2010. True, the drop was only 1.1 percent, but it comes on the heels of a report by the Graduate Management Admission Council that business-school applications were down at more than two-thirds of traditional full-time MBA programs.

Not only did the decrease snap a six-year streak of rising application numbers, it also runs counter to conventional wisdom that when the economy is down, students turn to graduate school to upgrade their credentials or wait for better times on the hiring scene.

So what's behind the drop in applications? CGS staff point to a number of factors, but they all seem to come back to lingering economic uncertainty.

Experts speculate that as the job market stays tough, people are more reluctant to leave a job to go back to graduate school. At the same time, students may be less willing to take on loans to fund an expensive degree, and employer funding for graduate programs is a rare perk in an era of corporate cost cutting.

Bar graph: Grad school enrollment

The report also found clear differences between enrollment trends in doctoral programs (up 1.5 percent) and master's degree and graduate certificate programs (down 1.6 percent). About 84 percent of all new graduate students in 2010 were master's degree students, who tend to be eligible for fewer grants and stipends than doctoral students.

Interestingly, the study reports that even though enrollments declined last year, applications to graduate school were up, indicating that potential students are still considering graduate school but apparently opting not to enroll.

That decision could spell trouble for the U.S. in the future. Debra W. Stewart, CGS president, cited data from the Bureau of Labor Statistics that 2.5 million more jobs will require a graduate degree by 2018.

"Unfortunately, our numbers are going in the wrong direction," Stewart said in a press release. "Strategic investments are needed now to support graduate students and the development of highly skilled talent."

Graduate enrollment numbers varied from field to field. Declines in education (8.3 percent) and business (2.9 percent)--two of the largest graduate fields--were largely responsible for the overall decline, study author Nathan Bell told Inside Higher Ed.

Other fields saw an increase in overall enrollment in 2010, including health sciences (6.4 percent) and engineering (3.1 percent). Some of the nation's fastest growing jobs require advanced training in these fields. Careers such as biomedical engineer, medical scientist, physician assistant and computer engineer are all expected to see growth of upwards of 30 percent between 2008 and 2018, according to the BLS.

A 2011 report from Georgetown University found that workers with a master's degree had lifetime earnings that were, on average, $400,000 more than someone with a bachelor's degree; individuals with a doctorate averaged $1 million more.