Financial Challenges for the Class of 2010
Have you heard the popular statistic that a college graduate earns an average of $1 million more over the course of a lifetime than a person with only a high school education? That number should make just about any lackadaisical high school kid scramble to open a savings account in anticipation.
However, it’s doubtful that you’ve also heard the cost of attending college has risen at twice the rate of inflation for the past several years, according to Forbes.com. Even more disheartening is the extra $47,600 it costs, on average, to obtain a four-year degree at a public school, or close to $100,000 at a private university. So much for that million.
In fact, debt is one of the biggest challenges new grads will be facing. This, combined with a recession, dismal job market and no hope for improvement in sight, makes it a tough year for the class of 2010.
Unemployment Fuels Competition
The Unemployment Handbook reports that as of January 2009, “the number of unemployed Americans jumped to 11.6 million. 2.6 million of those have been unemployed for more than 27 months.”
With thousands of Americans losing jobs every day, the competition for positions among new college grads is as fierce as ever. Not only are these twenty-somethings contending for their dream jobs amongst each other, but a pool of desperate, over-qualified professionals with decades of experience behind them as well.
New Grads Don’t Make Much Money
Studies indicate that the grads who do manage to land jobs will suffer low wages for the next 10 years or so.
According to the Wall Street Journal, research shows that graduating during an economic downturn results in long-term consequences, including “lower earnings, a slower climb up the occupational ladder and a widening gap between the least- and most-successful grads.” Further, for every percentage-point increase in the unemployment rate, a recession-era graduate earns seven to eight percent less in their first post-college year than an equivalent worker in steadier times.
Many new grads enter the job market expecting to fall right into the appropriate entry-level slot they’ve been planning for. These days, however, a degree alone guarantees nothing. For many among the class of 2010, the first couple of years will be spent living at home and working part-time for minimum wage until they can obtain a position in their field.
Haunted by Student Loans
Many students borrow money to pay for college without really thinking about how they’re going to pay it back, especially in light of the current economic situation. In fact, the average college student graduates with $19,200 in debt, placing a heavy financial burden upon their shoulders before their adult life has really begun.
For those in over their heads, there is little way out. Current bankruptcy law makes it nearly impossible to ditch student loan debt.
The class of 2010 should not expect to move straight from dorm room to penthouse.
So How Do You Prepare?
If you’re thinking about attending college or even about to graduate, don’t let the above scare you too much. One of the greatest qualities of this generation is it’s ability to adapt. The following are a few tips to survive in 2010′s post-grad world:
- Be willing to start at the bottom. Don’t expect your degree to land you your dream job on day one. You and a thousand other highly qualified applicants are all battling for the same job. Take what you can get and focus on gaining experience as you hunt for better offers.
- Save money. College grads are usually so sick of scrimping and saving to meet college costs that they go a bit overboard after graduation. Don’t treat this new phase of your life as a free-for-all. Take advantage of your young age by socking away some money before the bills really start to pile up.
- Pay-off student loans ASAP. They may seem big and scary, but they are not going to go away. There are numerous ways to manage the various loans you’ve accumulated over the last four (or more) years. Pay them down now so you can begin with a clean slate again.
This guest post was written by Go Banking Rates, bringing you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide. Follow them on Twitter at @GoBankingRates and on Facebook at /GoBRates.
Photo credit: Shertila Tony
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