Time magazine is out with a sobering statistic for this year’s graduates; the typical college grad will leave school owing nearly as much money as they’ll probably make in their entire first year of full-time employment.
That is, of course, if they’re lucky enough to find full-time work. On average, according to the Fidelity Investments Study, graduating seniors will come out of school owing $35,200.
Balance that with the fact the average annual salary for the graduating class of 2012 was $44,455 and you have a real national problem.
I use the 2012 stats because my son — who is currently living at home — is living the life of the “average” college grad. Yes, he’s lucky enough to have a full-time job and he’s actually working in the sports management field he studied. But he’s living 15 miles out of New York City making less than the average salary given above.
He’s also not getting any benefits since he’s working for a very small business. The saving grace is under President Obama’s Affordable Care Act he can stay on our medical benefits for a few more years. There’s not a whole lot of extra cash left for buying a new car or getting a place of your own.
As the article points out, many kids today are taking any job just to pay the bills. After all, once those loan payments start, they don’t stop for many, many years.
Our son’s girlfriend, who wanted to go on to grad school, is finding she can’t since she already has looming debt from college. She also can’t find a job doing what she studied because most positions in her desired field require a graduate degree. Instead, she’s working full time in retail, making less than she owes.
Indeed, many students need a graduate degree to pursue a career in fields such as psychology and education. But how are they supposed to pay for grad school when they’re already in debt up to their eyeballs? Simply adding more debt is not the answer.
As parents, you want to do everything you can to helps your kids. We paid for much of our son’s tuition but asked him to contribute some by taking out loans so he’d have a sense of responsibility towards his education. And we’re not alone. The study shows 85% of recent grads contributed to their college tuition and expenses. 81% worked during school or over the summer to help out with expenses.
So the part that really burns me about this study is the suggestion that “better-informed students would make wiser choices.” Their research suggests “39% of recent grads said they would have planned differently if they had understood how much debt would pile up.”
I’m just not sure how you can plan differently. When the market tanked in 2008 and people started losing jobs along with their investment accounts, many students looked to state schools to save their parents some money. But when everyone is in the same boat, competition becomes stiff. Financial aid and scholarship money can only be divvied up so many times.
Their suggested “tips” for planning for college include planning (saving) earlier, controlling costs while in school and perhaps choosing a major that will better impact your career goals.
I can’t imagine that in today’s economy, people aren’t thinking about and planning for the skyrocketing costs of college early on. And while it’s always great to choose a major that will yield a higher income, these kids will be working for the next four decades of their lives at least. I think they deserve to enjoy what they’re doing and work in a field they’re passionate about.
I’m not sure what the answer is – I’m still trying to figure out how to co-exist with two 20-somethings who desperately want a place of their own. I do, however, think it’s time for a real discussion about the outrageously high cost of a college education.
I’d love to hear your thoughts.
