College graduation: A diploma in one hand and a mountain of debt ahead.

May 13, 2009 – 8:49 pm – No Comment

College is supposed to be the next step after high school; it is supposed to be where you become a well rounded individual and educated to get out in the “real world” to earn money and afford the life that you dream of.

This is not so much the case when the economy has gone sour.

I just witnessed firsthand a college graduation; I graduated with my B.B.A. on Saturday. Looking at the future is scary, and not having a job is worse. I will be taking classes through the summer, but August will be here in no time and I will be expected to have something lined up so I can start paying my $30,000 in student loans.

Luckily, I have been fortunate enough to be able to make it through college with only student loan debt and not credit card debt. A recent report has indicated that many students are graduating college with around $7,000 in credit card debt and much more debt in student loans. So of course the rate of default on student loans has increased in the past year.

The entire situation of hundreds of thousands of people graduating is exacerbated by unemployment and employers being far more particular about whom they hire. After looking for jobs in marketing, I’ve realized that if you don’t have at least 3 years of experience in the field, you are unlikely to find something right out of college at a marketing firm (unless you graduated with highest honors it seems).

There is some hope though; in July a new federal program will go into effect that allows graduates to cap his or her monthly loan payment to 15% of his or her income. While the program was created to give some relief to those who go into lower paying industries like teaching, it will help everyone. Another benefit to this program is that in some sectors, public service loan forgiveness will go into effect after 10 years of payments; all graduates’ loans will be forgiven after 25 years of payment.

I can’t imagine still paying back loans after 25 years. I am personally hoping to have my loans paid off in 10 if all goes well. I would love to have them paid off sooner, but I have to make sure that the bills are paid first. I think this is where the problem is coming from when students graduate. Like me, they live with their significant other or spouse, or are on their own and have to make sure that they have a place to live rather than worry about student loan payments.

However, it looks like this federal program will be helpful to graduates that will have a hard time paying back their student loans because of other financial obligations.