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I had always planned on focusing on my studies until senior year and obtaining at least one year of work experience in my field before graduating to set me apart. Due to a number of factors, I am now ready to graduate but have not yet had employment in my field; this is due to outside matters and not inability to find work. I believe it is in my best interest to begin working before graduation, because companies may more readily hire cheaper workers and I may be allowed a more pleasant learning curve as I start out. I do not want to enter the workforce full time and be let go because I didn't judge my capabilities correctly. As a graduate I will also be competing for larger salary numbers against others who will most likely have this industry experience.

  1. Finances/Tuition/Living Expenses aside, for the reasons stated above, would it be wise to delay graduating in order to work for an extra semester?
  2. Will this experience allow one to apply after graduation as a "Level I" candidate instead of "Entry Level", thereby significantly raising their salary?
  • The question of "What took you so long?" seems easier to answer than "What have you been doing this whole time?". From what I understand, I do not need to provide a start date, only a finish date. Work experience will be more obvious if it is lacking. It is also important for me to hit the ground running after graduation, instead of being unemployed and waiting for student loans to attack. This type of sedentary inertia can be difficult to overcome. But these reasons are personal, and the purpose of the question was practical. – user58446 Sep 8 '16 at 18:39
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TL:DR: No leapfrogging, there is a risk you won't get your degree afterwards and you might hurt your career.

Graduate first, experience comes later, you won't skip the entry level jobs status until you have enough experience (2-3 years). Furthermore if you don't graduate you take the risk of not graduating ever, there are many cases of people that started working before graduating and when they got some money, more responsibilities, they just kept postponing graduation, it's hard to get back to school after already working, so they never graduated.

Furthermore, the careers of some of them where hurt by this fact because of their undergraduate status it was harder for them to be promoted or to move from the company to another where having the degree was a requirement, just finish what you've started.

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During my job hunting after University I was considered an entry level employee when I graduated despite a few years of relevant work experience. But as I wasn't an engineer back then it was considered to be un-skilled labour.

Having industrial experience is an important factor, however seeing as you will likely still be seen as an entry level employee an employer is well aware that you will need guiding influence and a mentor of sorts.

When deciding to delay your graduation you should consider the following:

  • Is it financially feasible and does the extra cost merit the experience you net? This should be a part in your decision.
  • How do you explain to a potential employer that you delayed your graduation with a year? In many regions this is not a major point, but in Scandinavia an employer would be cautious if you extended your graduation beyond the norm. It can be seen as if you can't deliver on time or that you have difficulty delivering under pressure.
  • I am doubtful that one year of experience will net you a significant increase in pay, from an employers point of view one year is an awfully short time.
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Your question lacks some focus but this has grown too long for a comment. Generally though your questions are related to a single theme so I'll have a crack at them.

Would it be wise to delay graduating in order to work for an extra semester?

That depends on the type of work you'd be doing, the odds of finding work when you graduate, your personal situation and preferences, whether you'd continue working for the same employer after graduating and so much more.

Generally speaking, unless you have very clear and convincing arguments for why this particular work experience will make you a more attractive candidate in the field you want to pursue, you should always prioritise graduating. In all fields, employers routinely hire graduates as "affordable" employees with the expectation that they'll need to get used to the working world. That's a system that works and if you delay your graduation you risk entering the job market at a time in the year when fewer companies are hiring graduates or some year(s) after your peers. Having a longer-than-standard timeline for your degree (5 years as opposed to 4) is also a potential blemish on your history. It won't disqualify you but you'll typically be expected to explain why you choose to delay graduating and you'll need a convincing reason.

Work experience and internships are key differentiators for your profile as a job candidate but a few months or even a year of experience is usually not worth delaying your graduation for that same length of time.

Will this experience allow one to apply after graduation as a "Level I" candidate instead of "Entry Level", thereby significantly raising their salary?

No. The "entry level" mark will apply to you for at least a year and more commonly two. The most significant relative raise in most people's careers happens after they've got 2-3 years experience and move on to a new company.

As a graduate I will also be competing for larger salary numbers against others who will most likely have this industry experience.

Not true. You'll be competing for jobs, not salaries. People with that experience have an edge over those without, but that doesn't typically translate to a higher starting salary, unless it's a few years' full-time work experience, but those normally aren't competing with your for entry level positions. Most of your competitors will have internship experience or part-time experience, often in unrelated fields. That counts for a lot in getting people to the top of the candidate pool but for very little when it comes to entry level status or salary. Aside from that, many companies don't negotiate salaries for entry level candidates anyway.

I believe it is in my best interest to begin working before graduation, because companies may more readily hire cheaper workers and I may be allowed a more pleasant learning curve as I start out. I do not want to enter the workforce full time and be let go because I didn't judge my capabilities correctly.

Unless you end up working for a very unreasonable employer that's operating in bad faith you won't be. As a graduate with no experience you'll be expected to need some time to settle in and get used to office work. You will make mistakes but long as you focus on owning up to them and learning from them you're already ahead of the curve.

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