Recent college graduates with student loans will have an average of $40,000 of debt.
Increasing tuition costs, rising interest rates and college debt have been making headlines for years, but one company decided to put real numbers behind all the speculation.
The finance staffing firm Accounting Principals conducted a phone survey last month of 507 recent college graduates about their college debt and spending habits.
“We invested our latest economic survey to put hard numbers behind the news and find out how recent grads are handling their finances and debt,” says Jodi Chavez, senior vice president of Accounting Principals.
Key findings in the survey include:
- •Recent college graduates with student loans will have an average of $40,000 of debt.
- •One in five can actually afford all the necessities included in the survey (i.e. groceries, rent, cellphone, car and student loan repayment).
- •On average, male recent graduates owe 28% more in student loans than female recent graduates.
“Most college students are managing their own income and expenses for the first time,” Chavez says. “We wanted to set note on expectations new grads have about their finances versus the reality today.”
More than half of recent grads (65%) earned $45,000 or less at their first job after college, according to the survey.
“Students are graduating with debt almost equal to their starting salary,” Chavez says.
Zach Despart, a 2012 graduate of the University of Vermont and current assistant director at WCAX-TV in Burlington, Vt., says he is not surprised at all.
“My student debt right now is more than double my salary, which is concerning because my job requires a college degree and a lot of technical experience,” Despart says.
The Accounting Principals survey also found that male recent graduates have more than twice as much non-student debt than female recent graduates, but this is not the case for Despart, who says he doesn’t understand why there would be such a disparity.
“I will be paying back loans for a long time, but at least I know it’s for my education, and not on credit cards or something else,” he says.
Caitlyn Campbell, a 2010 graduate of Johnson & Wales University, says her student debt is currently under control thanks to scholarships and substantial contributions from her parents, but she still has many friends who are not so lucky.
“With interest charges beginning only six months after leaving school, it doesn’t leave much time to nail down a high-paying job, especially given our current economy,” Campbell says.
But what does this study mean for students still attending universities?
“It certainly sheds some light on what recent grads would have done differently had they had the information that they had today,” Chavez says.
If they could go back in time, nearly a third of recent graduates would have:
- •Actively pursued more scholarships/financial aid options
- •Pursued a different major that would have led to a job with a higher starting salary
- •Gotten a job while in college and started saving earlier
As for Despart and Campbell, however, they fall in with the majority of students who would have made the exact same choices, regardless of the cost.
“I went to a good school that was really expensive,” Despart says. “I’d rather that than have gone to a mediocre school and paid off my loans in five years.
“It’s a quarter-million dollar piece of paper, but you have it forever,” he says.
Campbell says she feels she did her best finding all the financial aid available and has a strong passion for the field she chose to enter, no matter what the earning potential is.
“Also, while in college, I took a non-paying job in my field to gain more experience,” she says. “I feel that decision has benefited me in the long run more than some earnings from a part-time job ever could have because it gave me an upper hand on others who are applying for the same jobs in this highly competitive job market.”
That doesn’t leave the two without concern for the future, though.
“College tuition has been skyrocketing out of control for decades, and I especially worry for my younger siblings,” Despart says.
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