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A college degree once represented entree to a middle-class lifestyle, but today it can be a debt sentence for years of crushing money woes, financial professionals warn.
That’s because most young adults leaving college carry an average student loan balance of $20,000, along with other debts.
And these indebted graduates are beginning their adult lives earning a median salary of just $28,000, according to a recent Rutgers study that interviewed 444 college graduates from the classes of 2006 through 2011.
In the first five years after college, the Rutgers study reported, many graduates have had to delay making a major purchase, such as a car or a house. Many moved back with their parents and have made little progress in paying off college loans.
“Four in 10 who graduated in 2009, 2010 and 2011 reported that they had yet to pay off any of their debt,” according to the Rutgers study.
“Compounding their financial challenges is the fact that nearly half (46 percent) reported that they also have other financial debts, such as credit cards,” the study said. Only some 13 percent of graduates had paid off their student loans within five years of taking a degree, the study said.
Add in the high rates of unemployment and underemployment, and it’s plain that young people who take on big college debt loads are setting up long-term problems.
“Weighed down by credit-card debt and student loans, many adults are already far behind before they even get started,” according to Bill Hardekopf of the credit website LowCards.com.
The average college graduate needs to become financially savvy at a relatively young age, Hardekopf says.
“I think it all falls back on the parents, not to pay for everything, but to train their kids in financial management,” according to Hardekopf.