Is There A Looming Student Loan Debt Crisis? (Part Two)

In the last post, we examined the rapidly increasing cost of a college education and the possibility of a student loan crisis similar to the recent housing crisis. Three main things led to the housing crisis; more homes and increasing prices led to decreasing values. Considering student loans, we’ve already seen how more people are getting degrees than ever before and how fast costs are increasing. To have a similar bubble, the value of a college education would have to be decreasing.

College graduates make more money than those without a degree on average. It’s a fact that everyone knows. But recent college graduates are struggling, especially in certain fields. Over half of Bachelor’s Degree holders under 25 are jobless or underemployed (holding a job that requires less education than the worker has, such as a college graduate working as a waiter/waitress). As many can imagine, engineering, accounting, computer science, and education majors are faring best. Those with majors in philosophy, art history, humanities, and other related fields are struggling the most.

More recent college graduates work as waiters/waitresses, bartenders, or food service helpers than as engineers, physicists, chemists, and mathematicians. There have always been college graduates working in jobs they’re overqualified for, but it seems to be getting worse. In the short run, some of it is due to the economy, but a longer-running trend exists, as previous blog posts of mine have examined. The Bureau of Labor Statistics predicts that only 3 of the 30 jobs projected to have the most openings in the next ten years will require at least a Bachelor’s degree. Naturally, most of these jobs pay less on average than jobs requiring a degree.

Here’s where the problem lies. We have a lot of recent college graduates working in low-paying jobs. Most of these graduates have student loans to repay, many with large debt loads. A lot of them can’t even make the minimum payment on their loans or any payments at all. Because interest accrues on itself, their debt keeps growing. At the same time, the future job prospects aren’t bright in a lot of fields.

This is bad. There will be a lot of people who will be repaying student loans into their 40’s, 50’s, and even 60’s or later, especially if they borrow a lot of money. There will be people who will never be able to buy a house or help their kids go to college because of loan payments.

Many say the true value of a college degree lies in the knowledge, experiences, and relationships that can only be gained through a college education. It’s true, college is awesome. But there’s a certain point. Is it worth potentially not being able to ever buy a house – fulfilling the American Dream? Of course, this won’t happen to most people. But it will happen to some. How can you prevent being caught in the student loan bubble?

• Keep loans to a minimum. Skimp by as much as possible to prevent your debt load from getting too high.
• Improve your job prospects by making yourself stand out. Many, many college graduates will be very successful in their careers. The difference now is that you must work harder to get there. Gain as much experience as you, apply for as many jobs and internships as you can, and try hard in school.
• Come to Career Services! Our office is here to help you. Our staff will guide you in the right direction as far as gaining experience and entering the job market.

Thank you for reading, I have really enjoyed writing these blog posts. I wish you the best of luck in your career journey.

Landon J. Latham

Career Educator

Is There A Looming Student Loan Debt Crisis? (Part One)

At this point, everyone has heard about the housing crisis that strongly influenced our most recent recession. Property values increased greatly, incentivizing people to buy (and build) homes in hopes they could “flip” them for a profit. The crisis happened when the bubble burst – too many homes resulted in values dropped significantly. People quit buying homes and as a result, a lot of new homeowners ended up with houses that were worth less than they had been purchased for. In addition, the economy caused a lot of people to lose their source of income. High payments coupled with lower incomes caused massive numbers of foreclosures. Five years after the housing bubble burst, home prices are still dropping.

There were three main trends in the housing crisis:

• Too many homes. 
• Too much debt. 
• A drop in home values.

Could the same thing happen with student loans (replacing houses with college degrees)? Surely not, I mean, it’s college! Of course college is worth whatever the cost is. Or is it? For a student loan bubble to occur, the same trends would have to be in place.

The number of college graduates is increasing relative to the population and continues to increase. More high school graduates go straight to college than ever before. The data in the chart only goes to 2003 and the trend has become more pronounced. In 2012, more than 30% of adults 25 and older had Bachelor's degrees for the first time ever. More college graduates is very good for society in several ways. But, it means more competition for jobs requiring college degrees. Your Bachelor's degree isn't doing much for you if you're up against 40 other people with the same degree applying for the same position.

What about debt? Everyone knows that tuition and fees are increasing at a blinding pace. How bad is it? Since 1990, prices have increased an average of 75% for most items. Healthcare costs, another hot topic, have increased about 150%. Tuition and fees have increased 300%. 300% in twenty years and it’s growing exponentially!

Naturally, this has resulted in much higher debt loads for students; if you pay more and more each semester, your total debt will be higher at the end. Also, because of accruing interest, the total payments made will be (significantly) more than the amount originally borrowed. To show this, let’s use Georgia Southern as an example. Students entering in Fall 2008 were guaranteed the same tuition every semester they enrolled. This luxury ended with students entering Fall 2009 and later. If a student entering Fall 2008 paid in-state tuition and borrowed the exact amount needed to pay for tuition and fees each fall and spring semester for four years, their total debt would be $21,999 at graduation (assume standard Stafford Loans with interest of 6.8%). If this loan was paid off in ten years (standard repayment period), the monthly payment would be $253, totaling $30,380 over ten years. The same student entering Fall 2009 would owe $29,135 at graduation. The monthly payments would be $335, totaling $40,234 over ten years. What a difference higher tuition makes – almost $10,000 over the lifetime of a loan!

Keep in mind this is in-state tuition at Georgia Southern, one of the most affordable colleges in the country. Imagine the debt loads at private colleges or public colleges in states not known for affordable college education. While costs have been rising sharply, financial aid has not been kept up. In my next blog post, we will look at the benefit of a college education and put everything together to examine just how a student loan bubble might occur.


Landon J. Latham
Career Educator

Is Grade Inflation Bad?

Even though it might not seem like it on days when you get a test handed back, one of the prominent trends in higher education over the past few decades has been a steady increase in the average GPA’s of college students. In 1960, the average GPA was around a 2.5 (4.0 scale). By 1980, it was around 2.8 and in the 2000’s, approached 3.1.  Have people gotten smarter? No; based on the statistical concept of random sampling and psychological research of intelligence, the people in college today are more or less just as smart as students were in the past. The increase in GPA’s is simply because good grades are easier to get these days. The below chart shows the drastic increase in the number of A’s given over the last half century.

What does this mean for current college students? Let’s start with the good (and the obvious). Good grades are easier to get. This may help marginal students by increasing the likelihood they will grades satisfactory enough to stay in school and potentially even graduate. With the average GPA above 3.0, more students will have GPA’s worthy of being displayed on their resumes.

Unfortunately, there’s also some bad to go along with the good. For top students, it’s now a lot harder to stand out. Good grades won’t cut it anymore. To stand out, you now need other skills such as leadership and communication along with relevant experience. For others, grade inflation could potentially “inflate” their qualifications and lead to problems down the road.

Landon J. Latham

Career Educator

Decoding the Help-Wanted Ads Jargon

Fortune magazine points out something I think most people have noticed – most job postings and help-wanted ads sound the same. For example, “Seeking a motivated team-player” could easily be found in half of the job postings on any career website at any time. With the widespread use of such jargon, what do these words mean? Are employers sending a message to potential employees? Here are what some career experts have to say about commonly used help-wanted buzzwords:

Detail-Oriented: This may be used to describe positions that truly are detail-intensive, such as accounting jobs. Otherwise, it could imply that your supervisor might be somewhat of a “control freak” and you will be heavily scrutinized.

Team Player: This can mean you’re expected to take whatever’s dished out to you. “Team player is a code phrase for someone who will allow us to do whatever we want to you.”

Fast-Paced Work Environment: This indicates the employer expects you to be consistently productive no matter what. It also suggests the workplace is hectic, whether or not that is the industry standard. “Fast paced means you’re going to work more hours than we’re paying you for.”

Multitask: The employer using this phrase expects you to perform different duties beyond the job description. “What they’re trying to say is, ‘We may switch up your job description without telling you and we want you to be okay with it.’”

Self-Starter: This implies the employer will likely provide little in the way of guidance or direction. You’ll be expected to produce on your own.

Results-Oriented or Self-Motivated: This is often used to describe sales positions or other jobs with commission-based pay. You likely have to be very driven to be successful.

Early-Stage or Venture-Backed: This is often used by startups and other small businesses. Don’t expect a lot of available resources or high pay.

Experience in an Entrepreneurial Setting: Similar to the last buzzword; implies a job with a non-linear description. Expect to do anything, even taking out your own trash.

Landon J. Latham

Career Educator

Things Looking Up For Class Of 2012

More positive news about the job market – employers are hiring more recent graduates and offering higher salaries this year than in past years. Employers expect to higher 10% more graduates this year than from the Class of 2011. The median salary offer is estimated to be $42,569, an increase of 4.5% from last year.

The majors in highest demand are, in order, engineering, business, accounting, computer science, and economics. These majors are also the highest paid this year; with each being offered annual salaries that average in excess of $40,000. Engineering majors are being offered the highest salaries; $58,581 on average. Other fields are seeing better outcomes as well; the average salary offers in education and communications increased by 4-4.5%.

Surveyed Job Offers For Recent Graduates (NACE)

This report really shows that the job market is improving. With high sustained unemployment, companies have often been able to hire experienced workers for similar pay as recent graduates. The increase in hiring of recent graduates shows the pool of unemployed workers is shrinking, or at least workers with the skills these employers are seeking. As the picture improves for graduates this year, those of us who will still be in school can expect an even better market in the next few years.

Landon J. Latham

Career Educator

How Much Should You Be Paid?

Knowing how much you should paid is a sensitive topic. Salary should be based on a variety of factors. For most graduating college students, the two main factors in determining starting salary should be job title and location. Fortunately, resources are available to help you determine salary based on these factors.

Salary Calculator – Use city search to determine specific salary estimates. Here are a couple of examples:

Teacher – Statesboro, GA: $36,017

Teacher – New York, NY: $74,463

Registered Nurse – Statesboro, GA: $58,692

Registered Nurse – New York, NY: $84,538

Beyond knowing how much you should be paid, understanding cost of living can help you decide what jobs you will apply for and even where you apply. This cost of living calculator can provide insight into what salary is required to maintain an equal standard of living in different places.

For example, if you’re a teacher in Statesboro making $36,017, the salary required to maintain an equal standard of living in New York City would be $86,490. Considering the average teacher salary in New York is $74,463, your standard of living will most likely be higher in Statesboro than in New York. If you’re unsure of where you want to work, analyzing differences in average salaries and the cost of living can help you decide.

Landon J. Latham

Career Educator

How to Beat Entry-level Boredom

CareerRookie Magazine is a publication that is primarily aimed at students. I really enjoy exploring and reading the magazine because it provides information about various topics in the career arena. As I was recently reading the magazine, I ran across an article that explains ways to combat the boredom that may occur when working on an entry-level job. Most college students will enter the workforce via an entry-level job or internship that requires low levels of responsibility and may certainly come across as boring work. The article mentions that “one of the most common complaints we hear from young professionals is that they are bored out of their minds”. Considering that most entry-level positions are composed of lowly tasks, I could certainly see how this statement could be true.  The article also discusses that much of the “entry-level boredom” could be a result of students being so enthused about finally pursuing a career and graduating from college that when they touch down at their entry-level desk, in an entry-level setting, with typical entry-level pay, they are more than slightly disappointed. A typical complaint stated in the article heard from young professionals is, “I expect work to be fairly boring, it’s work. But it really chafes my bum to think about all the things I could be doing instead of sitting here, praying that something will need to be typed”.  As unfortunate as this statement may sound, many entry-level employees are feeling acrimony. Here are some tips for battling boredom:

1.       Write down a list of things that you would like to get done before you leave work and put it in a place that you would see it, such as on your computer monitor.

2.       Be honest with your supervisor and ask for more work.

3.       Set up a meeting with a co-worker or supervisor about a project that the organization is working on and express your interest. Let them know that you are interested in becoming more involved.

SShayla Frinks

Career Educator