Newly minted grads face loan loads
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To the Class of 2011:
There are a few things you should know before you embrace the challenge of making a living based on everything thing you've learned (or were supposed to have learned) over the past four (or five, or six) years.
You've completed a college education that cost considerably more than what your parents, if they were fortunate enough to attend college, paid for theirs. Moreover, in all likelihood, you (and they) borrowed considerable sums of money for this privilege.
The Class of 2009 left college with an average debt of $24,000, up 6 percent from the previous year, according to The Project on Student Debt. Those are the latest figures available. Given that tuition and fees rose anywhere from 4 to 8 percent in your senior year, according to the College Board, there's a good chance the Class of 2011 will have more debt than the Class of 2009.
Your reward is a lousy job market. Some of you already know that after coming up empty on the interview circuit. Last year, the unemployment rate for college graduates younger than 25 years old was 9.3 percent vs. 5.4 percent in 2007, according to the Economic Policy Institute.
Whether you have a job or not, payments on your student loans soon will be due. You will be informed in a number of ways and at a number of times what your monthly payments are and when you must start making them.
If you borrowed the $24,000 that the Class of 2009 averaged, your monthly payments may be in the neighborhood of $275 a month. The amount will vary from student to student based on what types of loans you took out. Federal student loans carry lower interest rates than private loans.
Consider that $275 a month in light of what will come out of your paycheck for rent, food, clothing, entertainment, credit card payments and other expenses. Also consider that making your student loan payments on time will improve your credit score, making it easier to buy a car or home (assuming you eventually leave home).
First Published April 24, 2011 12:00 am
