Go to college to gain knowledge and become a better human being? Do what you love and the money will follow? In today's world this dream needs a little substance! The right college degree increases earnings potential over time. According to Bureau of Labor Statistics, the median income for young adults with a bachelor's degree is $54,756, an associate degree is $39,936, and a high school degree is $33,176. Student debt is having long-term impact that is crushing student, family, and community and rapidly being our country's top financial concern. Graduates with average student debt find the necessities difficult to afford (groceries, rent, etc.) and non-necessities (vacations, socializing, or eating out) virtually impossible. Financial decisions made in the next few years will dramatically affect many basic choices over the next two decades for our youth.
As students prepare for exciting adventures, they need to be prepared to make the most of it. Now is the time for family to create a final budget and expectations. Regardless of how interesting a major is, the student must ask some hard questions. Are you realistic of what kind of salary you might receive when you graduate? What if you can't find a job within your degree? The burden of college loans is getting heavier and changing the future of our young adults! While college graduates typically earn more than high school graduates, not all earn the same. Each major has different job potential, different earnings, relocating and debt repayment. Humanities majors have higher unemployment rates and typically earn less.
Fifty four percent of the 2011 Colorado college graduates had an average student debt of $22,300, compared to about $11,000 ten years ago. For the 35 percent that graduated with a four year degree from Colorado State University, this cost an estimated $75,700 to begin preparing graduate. At Fort Lewis, the 15 percent that graduate with a four year degree expended about $55,100. Choice of school and location can easily double that number.
After one selects a viable major, the next important piece is total student loan remain less than first year annual starting salary (www.bls.gov/bls/blswage.htm). Many graduates are convinced they will draw a high salary and ignore the 13 percent unemployment for this age bracket. Under employment is also a concern. With an average gross salary of $45,000, a new graduate takes home $2,500/month. Typical loan repayment is ten years requiring a monthly payment of $260 (at 6.8 percent). Should payment drop to $200 monthly, duration increases to fifteen years conversely if payment is 10 percent of the gross monthly salary, payoff drops 40 percent down to six years. Automated payments can decrease interest rate by ¼ percent (average $500 saved).
Be realistic about your career path. If the major of choice leads to a low paying job take that into consideration when borrowing funds. The average humanities graduate earns $1,625 (after taxes) monthly with a monthly loan payment of $229. Contrast this to a computer science graduate who earns $2,696 and has loan payments of $265. Be realistic and conservative as to what one earns with degree of choice. Look at majors that are in demand now and future such as engineering, Computer science, Nursing, and essentially anything that confers a Bachelor of Science degree. A degree in arts or humanities might fit personal choice but consequences of student loans must be evaluated carefully.
Contact the Montezuma County Cooperative Extension office at 565-3123.
