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.

Graduation

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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8 Responses to “Financial Challenges for the Class of 2010”

  1. Suzanne |  Jun 21, 2010 at 5:03 pm

    I feel for the 2010 graduates-the outlook is not great. However, they have many opportunities and advantages over recent grads from twenty years ago-the world is at their fingertips and social networking connects the world including grads looking to better themselves.
    Suzanne
    Social Media Specialist
    CareOne Debt Relief Services
    http://twitter.com/AskCareOne

  2. danielle |  Jun 22, 2010 at 12:00 pm

    one of the most difficult challenges is being prepared going into college. so many young people don’t know anything about personal finance management at 18 (including myself when i was 18). on the flip side, i think i saw on Oprah or Dr. Phil that students who borrow $20k and who only pay the minimum loan payments, end up paying roughly $80k when all is said and done.

  3. Suzie Savings |  Jun 27, 2010 at 9:37 am

    I think the best way to “prepare” is that high schools should be teaching financial literacy classes as a requirement to graduate. I certainly didn’t have any, which is why I’m trying to educate myself NOW as a college SENIOR (late-bloomer, I know).

    - Suz
    suziesavings.wordpress.com

  4. Stephen |  Jun 28, 2010 at 11:24 pm

    As with everyone else, it’s all about living within your means, as hard as it might be.

    It’s also worthy to note that times of tough economic activity and high unemployment are great times to start a business. Being young and naive can sometimes work to your advantage in entrepreneurship.

  5. Tamar |  Jun 30, 2010 at 9:24 am

    Fewer people should go to college. Once so many people are able to receive a degree, the degree is devalued. Middle-upper class kids who weren’t good students should consider trade school or junior college. Even good students should consider it, because sometimes the profession is much more marketable and profitable….

  6. kristopher-allen.com |  Jul 05, 2010 at 2:51 pm

    Franchise concept, if implemented properly, helping them to eliminate costly errors, and effectively leapfrog the learning curve that many companies fail and let the growth of a much faster pace. In the longer term, the franchise model help to outperform franchisees and over to achieve what they could do by themselves independently.

  7. Paul Cooper |  Sep 27, 2010 at 5:25 am

    Nice…good luck!

    Paul

  8. Hepatit |  Aug 07, 2011 at 10:06 pm

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