Students Struggle for Internships in Rough Economy

Jonathan Dunlop managed to score an internship this summer with Morgan Stanley, but
some of his Yale University classmates were not so fortunate.

Contending with a tough economy and uncertainty in the financial sector, major investment banks have dramatically reduced the number of interns they are employing this summer.

"I definitely had a couple of good friends come up empty," said Dunlop, 28, who worked in the fashion industry in New York for five years before enrolling at Yale's School of Management. "It is disappointing because it is such a long recruiting process."

Barbara Hewitt said overall internship recruiting decreased by more than a quarter at the University of Pennsylvania's Wharton School, where she helps place undergraduate students.

She said a large share of the dropoff can be attributed to financial services firms, which historically have had large internship programs.

"There were plenty of students who were interested in finance, but didn't land an opportunity with some of their top choices," Hewitt said.

In the investment banking industry, some firms, like Goldman Sachs and Morgan Stanley , have reduced their internship classes, while others, like Lehman Brothers, disappeared or merged with other banks amid last fall's collapse of the financial sector, leaving fewer opportunities for students.

Seeking Other Opportunities

As a result, Hewitt said students were encouraged to consider smaller boutique firms, unpaid opportunities, internships abroad — or even other industries.

"For some of them it was freeing, but for a lot of them it was frustrating," Hewitt said.

Having a smaller pool of interns also affects banks that rely on their programs to build pipelines to talent for future use. It is not unusual for interns in the banking industry to end up as full-time hires, making college programs important investments for firms that rely on attracting top talent.

The two surviving investment banks, Morgan Stanley and Goldman Sachs, would not say how many interns they hired for this summer.

A Goldman Sachs spokeswoman said the internship program was slightly smaller and people familiar with Morgan Stanley's program also said fewer interns were hired than in the past.

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Yale's School of Management placed 19 interns in investment banking internships this summer, compared with 35 last year, said Kristin Irish, the school's deputy director of career
development.

The decline in numbers has increased competition for internships and intensified students' focus on parlaying their summer experiences into full-time jobs.

Irish said banks are increasingly looking at interns as potential full-time hires.

"Students need to go in with the mindset that this is your job to lose," Irish said.

With the uncertainty they saw last fall as the backdrop, students like Yale's Dunlop are thankful for their opportunities.

"I definitely was concerned that I wasn't going to be able to get into investment banking," he said. "I didn't know what companies would still be around. It was disconcerting."

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