Not to further terrify those of us already dreading the college debt that’s waiting to greet us upon graduation, but according to a study released this week, college student debt is on the rise and the job market for recent grads is getting worse — not better — even as the economy improves. Say what?! Yes, that seems to be the cold-hearted reality. Rather than hide in a hole somewhere, now is the time to grab hold of the reins and take control of that student debt. While some of us excel at the avoidance route, taking measured steps to pay off that debt could make all the difference. Read on for these tips to prevent disaster.
Think a computer science degree equates to a guaranteed high paying job after college? Think again. In a report by the Wall Street Journal, quoted on the Huffington Post on March 26, 2013 article “Young college grads could be stuck with their dead-end jobs or worse: Study,” the National Bureau of Economic Research found that “American businesses need fewer people to develop and install the high-tech systems that drive an information economy.”
What this means is that as the demand for higher skilled workers decreases, so does the need for lesser skilled workers, as jobs have been eliminated by those high-tech systems, basically pushing some right out of the job market.
Further, the Center for College Affordability and Productivity reported that:
- 48% of recent grads work jobs that don’t require their college diplomas
- 38% of recent grads work jobs that don’t require high school diplomas
According to the Huffington Post contributor, “[Paul] Beaudry’s report is the latest to suggest that the American higher education sector has produced graduates at a rate that outpaces their market demand and leaves a record number of Americans with a record level of student debt.”
Credit card peril
Those of us in debt — or who will be after graduation — are joining the masses. In 2011, the average college student had $26,000 in student loans, according to a new report published on NBCNEWS.com on October 18, 2012, “Student loan debt hits record high, study shows” by Scott Cohn. One contributing factor is credit card debt. We all want to have fun in college and that costs money. The key is pacing ourselves, and not letting the spending get ahead of our budgets. Do we really need those $160 designer jeans? We are big targets for credit card companies, and to protect ourselves, we need to look out for number one. Some wise pointers to consider:
- Arrange for a secured credit card, which acts like a prepaid card, but allows you to establish a credit history.
- Ask a parent to establish an authorized card on his/her existing account where a maximum charge can be established.
- Try two credit cards if you’re over 21 to minimize interest: one for emergencies only and another for your regular charges, on which you pay off the balance every month.
Paying off debt
Perhaps some of the best advice on paying off college debt comes from Stephanie Hood, who has been through the college debt trenches and survived. Her description of her financial woes is a cautionary tale all of us could benefit from. In her January 15, 2013 post, “How I Paid off $90,000 in debt in three years,” on Forbes.com, talks candidly about how she dug her way out.
Some of the cost-cutting measures she used to pay down her debt included:
- Cutting cable. Stream movies online instead.
- Limiting data usage on the cell phone.
- Eliminating the gym membership. Use exercise videos or join an outdoor exercise club.
- Reducing entertainment and meals out to networking events that help your career. Invite friends over for potluck dinners instead of restaurants.
“Sure, I have to make sacrifices,” Hood wrote. “Since I normally work an extra 15 to 20 hours per week in addition to my day job, I sometimes have to say no to making Friday night plans with friends. But I know that this financial burden will soon be lifted, and I can always hang out the next night that I’m not working.”