College graduates struggle to find financial balanceDate posted: 5/16/14 06:15:00 PM
It can be hard for college graduates to get on the right foot when it comes to their financial standing. According to the Institute for College Access and Success, 71 percent of students who graduated from a four-year college in 2012 had major student loan debt attached to their name. The average debt was $29,400, which is a 25 percent increase from 2008.
"There are just fewer jobs, particularly for that first rung on the economic ladder," Rory O'Sullivan, deputy director of the Young Invincibles, an advocacy group that focuses on issues facing college graduates and young Americans, told the Los Angeles Times. "If you're hiring by seniority, the young people are going to be the first fired and last hired."
A study by the Federal Reserve Bank of San Francisco revealed salaries for recent college graduates have climbed at less than half the pace for all U.S. workers since the recession.
Many economists consider market wages for recent college graduates are a better measure of the true price of labor throughout the country. That's because companies have less freedom to adjust wages for existing workers, and more liberty to adjust wages for new hires.
Bart Hobijn, a senior research advisor at the Federal Reserve Bank of San Francisco, said recent graduates are a great indicator for the labor market because they aren't tied down to a particular field.
Hobijn and his research stated that slower wage growth doesn't mean that college grads are landing worse jobs than previous generations, but it will likely take these graduates longer to earn back the cost of their education than those who graduated during the boom years.
Cody Hounanian graduated from the University of California Santa Barbara in 2013. He told The Los Angeles Times that he landed a steady job as a manager at Whole Foods in his hometown of Santa Clarita, California.
Hounanian initially planned to get an entry-level position at a law firm, but he thought the competition was a bit excessive.
"There's a lot of people fighting for those jobs," he said. "I don't dog on myself; I think I'm doing pretty good. But I could be a lot closer."
On the bright side, U.S. News reported that the job market is on its way up. The source cited a report from the National Association of Colleges and Employers that found companies are planning to hire nearly nine percent more new graduates in 2014 compared to the year prior.
College graduates have some options
According to Jean Chatzky, financial editor of NBC's Today show, recent graduates shouldn't be afraid to take a few risks once they've earned their diploma.
"Your 20s really are the time to explore," Chatzky told U.S. News. "Before you get married and before you have kids, you don't have a lot of financial responsibilities."
She said that many students are moving back home with their parents so they don't have to pay rent. This can be a smart short-term solution for those looking to get rid of some of their student loan debt while saving a nugget for future purchases such as a down payment on a house, a car or the first few months of rent for an apartment.
U.S. News reported that recent grads should also weigh the pros and cons of going to graduate school. In some career fields, holding a master's degree won't do much to increase salary or benefits. But in other fields such as education, a master's degree is necessary and could go a long way toward helping someone land a job.
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