As with initial undergraduate qualifications, theory suggests that a recession is a good time for postgraduate study. The opportunity cost of time spent out of the workforce is lower or non-existent. Studying is a relatively productive and interesting way of sitting out a recession.
In examining what happened in previous recessions I have been helped by a project that has put all the old graduate destination surveys online (scroll down to the bottom of the page here). Recessions aside, the trends are interesting.
In the early 1980s recession rates of further study did increase, but this seems to have interrupted a structural shift towards lower rates, as seen in the chart below. I have not carefully investigated its cause, but fewer people studying teaching was a factor.
In this period the supply of student places is a less useful proxy for student demand than in later times. In the early 1980s higher education was fully Commonwealth funded. A finite number of places was distributed between undergraduates and postgraduates. It is possible that more people wanted to keep studying but were not offered a place.
In the early 1990s recession further-study rates increased more noticeably than they had a decade previously. Between 1988 and 1994 restrictions on student numbers and fees were removed for many postgraduate coursework degrees. Although the fees were uncapped and paid up-front, the lifting of supply constraints meant that more demand could be met, as seen in the chart below (the decline in the late 1990s was due to Commonwealth-funded postgraduate coursework places being cut after the 1996 Budget).
Further important policy changes happened early this century. From 2002 income-contingent loans were introduced for postgraduate full-fee students, which continue now through FEE-HELP. This means that, in contrast to the current situation for undergraduates, policy encourages rather than discourages enrolment growth.
I believe that postgraduate education for current employees faces competition from shorter and cheaper online ways of acquiring new knowledge and skills. That may intensify as recession-struck firms look for ways to save money.
But for un- or under-employed graduates – and keeping in mind that through domestic higher education expansion and migration there are more graduates than ever before — a postgraduate course could be a constructive way of waiting for the recession to lift.
Compared to earlier recessions, however, many potential students already have substantial student debt. In addition, postgraduate fees are higher than undergraduate student contributions. If the postgraduate course is unlikely to improve job prospects that might (and should) lead to caution.
Overall, however, I think it is more likely than not that the COVID-19 recession will at least temporarily reverse recent negative trends in the domestic postgraduate market. Even people just bringing forward study they planned to do at some point anyway will boost student numbers.