New Financial Problems for College Grads

College Grads Financial Problems

Source: Reuters

We’ve known for quite some time the financial problems for college grads are growing. Many are graduating with a shoulderful of student loan debt and increasingly, credit card debt as well. It’s a struggle many face and the options, it seems are limited. Worse, news broke this week that their options are fewer than we realized. A new poll reveals half of all American college graduates are underemployed – and this doesn’t even take into account the growing number who have no jobs at all.

Financial Problems for College Grads

Close to 50 percent of recent college graduates are considered underemployed and/or they need further training in order to get a job in their chosen careers. The online survey included 1050 college graduates who earned their degree in the past two years along with another 1010 who are preparing to graduate later this year. Most are considered “heavily in debt” and many are in jobs they say doesn’t even require a college degree.

Here are a few of the numbers that define the financial problems for college grads:

  • 35% say their student loans are currently less than $30,000
  • 17% say they owe between $30,000 to $50,000
  • 42% of recent graduates say they will need an advanced degree if they’re to further their careers
  • 25% say they are strongly considering graduate courses
  • 76% of undergraduates graduate with credit card debt
  • $3,173 average balance on credit card for college students
  • 54% recent graduates say they have faced “difficulties” in finding a job
  • 39% did find jobs jobs after graduation
  • 16% say it was part time jobs they found
  • 50% say they have jobs in their field of study
  • 70% say their struggles have grown harder in the past four years and are increasingly finding it harder to make ends meet

Another interesting statistic the survey uncovered was the gap between what students expect to earn in their first job and their actual salary. Only 15 percent of this year’s graduates think they will earn less than $25,000 but a third of recent graduates said they make that amount or less.

Other Financial Facts

According to the Chronicle of Higher Education, nearly 20 million Americans enroll in college every year. Of that 20 million, 60% of them take out student loans to not only cover the costs of attending, but to apply towards living expenses during their efforts.

Currently, and according to the Federal Reserve Board, there are 37 million student loan borrowers with outstanding debt today. More than 20% call it a “hardship”.

Not only that, but, 14 million of those borrowers are under the age of 30. Ten million are between the ages of 30 and 39 and 5.7 million are aged 40 to 49. The remaining 6 million are over the age of 50.

Trillion Dollars and Counting

Remember, the U.S. cross the trillion dollar line in terms of college debt last year. To date, Americans have borrowed or are borrowing currently somewhere between $902 billion and $1 trillion in total outstanding student loan debt. The fluctuations are due to the different agencies providing the numbers and are partly the reason for the financial problems for college grads. The Federal Reserve Bank of New York reports $902B while the Consumer Finance Protection Bureau reports $1 trillion.

It’s believed that there is $864 billion is outstanding federal student loan debt while the remaining $150 billion is in private student loans. This, according to the Consumer Finance Protection Bureau, also notes that private student loans are not made or backed by the federal government.

Wondering how the dollars break down? According to the Federal Reserve Board, as the first quarter in 2012, the average student loan balance for all age groups is $24,301. Further, about one-quarter of those borrowers owe more than $28,000; 10% of borrowers owe more than $54,000; 3% owe more than $100,000; and less than 1%, or 167,000 people, owe more than $200,000. Note: Each agency’s numbers will vary, but we are using different sources to ensure a tighter accuracy.

For those who have graduated with a bachelor’s degree, their median debt was about $7,960 at a traditional public four-year institutions. For those attending private, not for profit colleges, they have about $17,040. For those attending for profit schools, they graduate with a median debt of $31,190. (This is sourced from the College Board)

The Numbers Don’t Lie

The numbers can get a little confusing, but there’s it’s clear the story they’re telling: many of our young people are setting up a vicious cycle that will take quite some time to get out of. This means they’re putting buying their first homes on the back burner. Many are working for ten or more years just to dig out of the debt that earning a degree put them in. This could explain why many are waiting to get married, start their retirements and other important life financial events.

In fact, the vast majority of student loan borrowers will still be paying back their debt well into their thirties – and if they’re not able to land the kind of jobs they trained for, it could take even longer to pay back their student loan debts.

Real Life

One woman we spoke we said,

Both my son and my sister graduated college at about the same time. Both landed great jobs in the medical industry – my sister is an RN and my son is a respiratory therapist. The last thing my son is interested in is getting married. He wants to be debt free and wants to build a house before he settles down. My sister, who returned to college after getting married and starting a family, is struggling to keep her house and her marriage.

Stories like these show the stark differences in how student debt affects different people. Interestingly, both were very sought after as they both graduated top of their class and were courted in a region of the country where there’s a shortage of good RNs and RTs. They both accepted positions in renowned hospitals earning top salaries. We spoke to both the sister and the son – both say they have credit cards, but each owes less than $1000 on their credit cards.

Are you paying down student debt and credit card debt? Share your story with us. We want to hear how you’re managing it after graduation.


About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.

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