Current News Blog

This week on The Real Recovery we’re looking at how the recession is affecting college grads. It’s tough to graduate into such a tight job market. Especially if you’ve got loans. For many, going to college automatically comes with a big chunk of money that must be paid off. As finding a job gets harder – that amount of money can hang like an albatross from your neck.

Posted on The Broke Grad Student

This breakdown, posted on The Broke Grad Student, shows average student loan debt by state – and no matter where you live, that average is somewhere between $13K and $26K. That’s a lot of money!

But despite the high costs the question for many American high schoolers is not whether to go but where to go. Are too many Americans going to college?

From the Chronicle of Higher Education:

Marty Nemko: Increasing college-going rates may actually hurt our economy. We now send 70 percent of high-school graduates to college, up from 40 percent in 1970. At the same time, employers are accelerating their offshoring, part-timing, and temping of as many white-collar jobs as possible. That results in ever more unemployed and underemployed B.A.’s. Meanwhile, there’s a shortage of tradespeople to take the Obama infrastructure-rebuilding jobs. And you and I have a hard time getting a reliable plumber even if we’re willing to pay $80 an hour—more than many professors make.

It’s estimated that on average college grads tend to make about 80% more per year in salary than those without a degree. That’s a pretty significant and motivating number, especially when you take into consideration the higher unemployment numbers for those without a college degree that we looked at yesterday. But if you’ve got loans – some of that has to go to paying them off. And for grad students it’s even worse.

Faced with a difficult job market and high student debts, many folks with a B.A. duck back into graduate school to forestall repayments they can’t afford. But as you can imagine – that just leads to more debt. Forbes has a controversially titled article that tackles the high debts a law degree can come with: The Great College Hoax.

Accepted into the California Western School of Law, a private San Diego institution, [John] Kellum couldn’t swing the $36,000 in annual tuition with financial aid and part-time work. So he did what friends and professors said was the smart move and took out $60,000 in student loans.

Kellum’s law school sweetheart, Jennifer Coultas, did much the same. By the time they graduated in 1995, the couple was $194,000 in debt. They eventually married and each landed a six-figure job. Yet even with Kellum moonlighting, they had to scrounge to come up with $145,000 in loan payments. With interest accruing at up to 12% a year, that whittled away only $21,000 in principal. Their remaining bill: $173,000 and counting.

Should you go to grad school? Most experts agree it only makes sense if you have a specific goal in mind. Penelope Trunk’s Brazen Careerist lists several points against enlisting in grad school to hide out from a recession:

1. Grad school pointlessly delays adulthood….3. Business school is not going to help 90% of the people who go….5. The medical school model assumes that health care spending is not a mess.

So what’s your experience? Did you go to college? Grad school? Did you have an albatross of loan debt? Tell us your story on The Real Recovery.

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Who is faring the worst in this recession? Everyone is doing poorly – but some groups have been more affected than others. The NY Times Economix blog broke down the numbers by huge swaths of demographics last week.

The graph that caught my eye was the very first one – apropos of our Real Recovery topic this week – how are recent college grads affected?

(That said, when you break it down by education, college grads have done comparatively well – those with less education have been more adversely affected.)

The worst affected group is young, African-American men who are less educated. This neat interactive graphic compares all the different demographic slices. Where do you fall on the graph? Has that been your experience?

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This week, the Real Recovery is focusing on college graduates – recent, upcoming and all-time. I wanted to highlight a few stories shared in the comment thread on the initial college stories post. If you have one – go to the Real Recovery group, click Post a Story, and start typing!

From user trangster:

I graduated this past May and applied for part time and full time jobs. After months of being rejected by employers for not having work experience because I was earning a college education at the time, I started working as a part time host at a restaurant. I recently picked up another part time job so now I’m working two part time jobs to meet bills. Hopefully I get accepted into grad school next year.

From user sugarlilly:

i am a recent college grad working in a job i love but that requires absolutely no education. sorry sallie mae, that 50 grand will have to wait.

From user Karolein:

The first term I learned on-the-job after college was “reduction in force”. It was a rude awakening. I finished graduate school in a recession and it took 18 months to find a full-time, regular job. After 15 years in a nice office, I’m looking again, but instead of living at home I have a mortgage to pay. Life is cyclical.

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It’s been a tumultuous for the economy in the half-week since we launched The Real Recovery: unemployment benefits were extended and then October’s unemployment numbers hit over 10 percent. It seems like just the right time to get to the real stories behind the economic stats.

Each week on The Real Recovery we’re going to ask a big question – and then spend the week figuring out the answer with your help. For next week – we’re looking at those entering the job market for the very first time.

If a tenth of America is unemployed – how hard is it going to be for recent college graduates to get jobs? For college seniors who expect to graduate in 2010? From the National Bureau of Economic Research: “The Career Effects Of Graduating In A Recession”:

Graduating in a recession leads to large initial earnings losses. These losses, which amount to about 9 percent of annual earnings in the initial stage, eventually recede, but slowly — halving within five years but not disappearing until about ten years after graduation.

Starting Monday – we’re going to focus on college graduates. Here’s how you can get involved:

Are you a college senior?: Post a story on The Real Recovery about your job search. Do you have something lined up? Are you just trying not to think about it?

Did you graduate this year?: How’s it been out there in the job market? Have you been able to find work?

Did you graduate years ago?: How was your experience in the economic climate you had? How does it compare to today’s?

You can post your story to Current by clicking the “Post a Story” button on The Real Recovery group page and then just start typing!

And also, if you want to get involved as an investigator – send me a message on Current.