A good education was supposed to be a path to a successful career. It often still is but there is a disturbing reality that may well persuade more intelligent teenagers that they are taking on unnecessary debts in order to earn that little piece of paper that confirms their graduation. Fairly recent figures suggest that the current level of student debt exceeds $1 trillion with around 85% being federal debt owed directly to the Government. There are some $37m young Americans with some form of student debt, 16m up from a decade ago.
Many have got into difficulty and have attempted to renegotiate their commitments but the Consumer Financial Protection Agency report that 65% have failed in their attempts. Tuition fees have grown over the last decade and there is no reason to suggest that the trend will reverse. There are critics that will point to the overspending of colleges on things with little relevancy to education. The claim is that they tend to spend too much on bureaucracy and some of their projects on stadiums for example should be funded in other ways.
The Current Figures
It would be wrong to suggest that everyone takes out a large sum; the average is around $24,000 which slightly exceeds 50% of the likely starting salary of a graduate. The recent years of financial difficulty have meant that those job opportunities are not universal. There is no doubt that the problems current students face are more difficult to handle than those previous generations encountered.
It adds up to a generation that feels under pressure. Everyone beginning a career in these circumstances will be torn between the need to start earning money and the money on offer to do so. Finance and consultancy jobs provide the best opportunity to earn good money quickly; careers in teaching and social work are far less attractive.
There are social consequences which must be addressed but there are also some lessons for individuals to learn about their financial situation and the best way to solve their problems. It may not be easy and there are likely to be sacrifices along the way.
One of the first things that everyone should do is to use a credit card only for convenience. The balance at the end of each month should be paid off in full with realistic loans website. The interest rate paid on outstanding balances is extremely high. There is ‘cheaper money’ and anyone with core debt on a credit card should find a cheap way to borrow and pay it off. If they feel they cannot discipline themselves to use the card properly in the future they should cut it in half without actually closing the account. Ironically that can affect a person’s all important credit score.
While everyone wants to spend when they start to earn regular income people with significant debt should resist; even pretend they still need to live like a student, relatively economically. A car must be regarded as a luxury and there will be little scope for expensive rental accommodation.
It is important to get rid of serious debt as soon as possible. There is plenty of advice around about the best ways to do it. There is nothing wrong in being a good listener. Anyone who has successfully graduated will have learnt how to gather information and make judgments on the best alternatives. It is something that they can do in their lives from the early days. The more graduates currently in serious debt that do that the more likely it is that recent graduates embarking on careers that can contribute to the national economy will perform effectively.