Ogden Nash once said, "
Some debts are fun when you are acquiring them, but none are
fun when you set about retiring them
." As the year comes to a close, the graduating class of 2011 will
experience the not so fun part of debt as they begin the repayment
period of their student loans. The six month grace period that they
received after graduating will end this November, and they will be
forced to begin making payments on the debt that they acquired over
the last four or more years of school. Many graduates are worried
about their ability to repay the balance of their loans.
Project on Student Debt
, an organization dedicated to making college more accessible and
affordable for Americans, recently released a report stating that
the average college graduate in 2010 had over twenty five thousand
dollars in student debt. While this number is staggering, the truly
devastating number is the 9.1% unemployment rate of recent college
graduates. For decades now, Americans have preached that if you get
a college degree, you will get a better job and make more money. It
is difficult to keep encouraging young Americans to take on large
amounts of a debt for a degree that can't guarantee them a job or
even more pay in the current economy.
Another frightening statistic is the amount of student debt that
Americans as a whole have acquired. The Federal Reserve Bank of New
York reported that students borrowed over $100 billion dollars last
year and this year, the total amount of outstanding student loans
will exceed $1 trillion dollars. This also means that Americans
will have more outstanding student loan debt than credit card
If you are trying to decide whether or not college is a good
choice for you or a loved one, you should consider a college
education as an investment and take the time to do some research on
the risks and benefits. I would recommend that you have a pretty
good idea of the area that you want to study and research the
starting salaries of potential job opportunities that you would be
qualified for in the field you wish to study. This will allow you
to see the Return on Investment for your college degree. After you
consider the salaries of potential jobs, you should begin looking
at different schools that offer a program in the field you wish to
study. It is important to find the best possible program for the
If you are unsure about what you would like to study, going to a
community college to do some of your general education classes is a
great place to start. Once you grasp a better idea of a potential
degree to work towards, you can transfer to a bigger university.
There is an argument on whether or not good debt exists. Many
advisors consider student loans a form of good debt. I would agree
there is a strong potential for you to obtain a job that can easily
allow you to pay for your student loans after graduation.
It is easy to assume that you will be competitive in the job
market if you have a college degree. As we have seen with the 9.1%
unemployment rate for recent college graduates, this assumption is
not something to rely on. When you do decide to start working
towards your degree, make sure that it is investment that will be
able to serve and provide for you in the long-run. Otherwise, the
not so fun part of paying debt will never pay-off.
The intent of this article is to help expand your financial
education. Although the information included may be relevant to
your particular situation, it is not meant to be personalized
advice. When it comes to investing, insurance and financial
planning, it is important to speak to a professional and get advice
that is tailored to your unique, individual situation. All
investments involve risk including possible loss of principal.
Investment objectives, risks and other information are contained in
the Snider Investment Method Owner's Manual; read and consider them
carefully before investing. More information can be found on our
website or by calling 1-888-6SNIDER. Past performance is not
indicative of future results.