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I think the guise of an internship has become a great excuse to hire someone for nothing. On the one hand, internships are great for experience, networking and the resume. On the other hand, as a graduate, you should be beyond an unpaid internship. All of that said, it looks better to be developing experience than it does to be doing nothing so while unpaid is undesirable, you are at least gaining something worth mentioning in applications to work elsewhere and while engineers are more marketable than most, in this economic environment, every bit of credibility has value.
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