Broke From Go

Broke From Go -- Why Graduates Today Are Cash Strapped And What To Do To Fix It

There are very few graduates today that would lump themselves in the “average”category. Average debt, that is.

According to Nellie Mae's student loan debt survey in 2009, the average debt loadcarried by an undergraduate was just shy of $30,000. Yet, when seemingly “average” recent graduates were asked, their debt loads were at least 1.5 times that if not more.

(And that's before taking into consideration the credit card debt many are carrying...)

In essence, they're Broke From Go. From the time these young people graduate, theyare far more cash strapped than any previous generation. Couple this situation with adifficult job market, a wildly fluctuating stock market, and a depressed housing economy-- it's no wonder the next generation is bucking the status quo.

My intern, Brandon, recently said to me after I had him investigating some statistics onstudent loan debt, “Can this be right? $200 a month payments for 10 years on $10,000 in student loans?”

He went on to discover that he'll need a salary of $133,000 a year to “afford” his student loan payments once in repayment status.

Know of any companies looking to hire a recent Liberal Arts graduate for 6 figures?

I didn't think so...

Such is the case with many students who've been sold a bill of goods as to the value oftheir degree. The fact of the matter is that many two year institutions are graduating 20year olds with degrees in high demand like nursing and telecomm. Many of whom are grabbing jobs paying in excess of $50,000 a year.

That begs the questions:

So, what are we to do about this cash-strapped generation?

First of all, encourage those who don't know what they want to do to attend a two-yearschool and get their general requirements out of the way. It's more economical and quite often, the classes are easier to get into than a larger institution. Guide them in gaining experience through internships so they get a sense of what they really enjoy doing. At that point, see if it makes sense to pursue the four year degree.

More loans are not the answer. Our administration thinks that making student loansmore accessible is the answer to our problems. What we need less of right now arecash strapped twenty-somethings. This is one of the most entrepreneurial generationsto have ever appeared on the scene and when they're in debt, they aren't as prone to start successful businesses.

The single best way to fix the problem is to educate those in the middle of it. It is up tothe institutions, the families, and the individuals to seek out every educationalopportunity to ensure students make wise and educated decisions when it comes to money.