New College Grads Being Challenged by Economy
It’s a staggering reality for thousands of young American college graduates as they enter the working world post-recession and are unable to find sustainable income.
After many years committed to acquiring a college education, young Americans have discovered that dream job they envisioned back in college may not be waiting for them. Reality hits, economists say, when the bills begin to accumulate.
From a high cost of living to substantial college loan debt, at least half of America’s recent college graduates are financially challenged at a time when they should be setting sail on a new adventure.
According to a Rutgers University study, nearly 50 percent of all those students who have graduated since 2006 do not have a full-time job. More than 10 percent are defined as unemployed or not working at all.
The circumstances are more dismal for those young people who graduated since 2009, according to the study. Less than 50 percent of college graduates in the past three years found their first job within the first year. This number is far worse than the 73 percent of graduates from 2006 to 2008 who landed a job within the first 12 months.
For those who graduated since 2009, the number of recent college graduates without a full-time job tripled from the previous time frame.
Low Starting Salaries Not Helping
Not only has the employment rate taken its toll on young graduates riddled with debt, but low starting salaries have stalled growth. Since there is an oversupply of job seekers and the economy is tight, employers know they can pay less.
According to the study, young adults who graduated from college during the recession earned an average starting salary of $27,000. These numbers are lower than previous years, economists believe, as this statistic included 43 percent of recent graduates who had to accept jobs below their skill level — jobs that didn’t require a degree. Almost 25 percent of respondents said their job pays them far less than they expected and nearly six out of 10 believe they will be less financially successful than their previous generation.
Hope is on the horizon, however, according to the National Association of Colleges and Employers (NACE). The September 2012 Executive Salary reported the overall median salary for recent graduates is slowly on the rise.
This year the numbers are up 4.5 percent from 2011 to close to $43,000 per year. This survey included its employer members and data from the Census bureau and the Bureau of Labor Statistics as well as data developed by Job Search Intelligence.
While income levels are said to be improving, a great majority of graduates are still struggling to make ends meet. A large number of young people require substantial financial help from family upon graduation and an estimated one third live at home or need help paying for housing. One quarter need assistance with food and healthcare bills.
More Students Returning to School
Another battle recent college graduates are facing is student loan debt which has recently topped $1 trillion dollars, the highest level in history. The average student loan debt in 2010 was more than $25,000 as more than $100 billion was borrowed that year alone to pay for higher education. Repayment of these loans has been challenging for a majority of graduates as they enter the job market during a sluggish economy.
According to the Rutgers University study, 20 percent of recent college graduates have decided to return to school, where they are most likely to acquire additional debt.
Economists are concerned with not only the short-term impact the recession has had on college graduates but the long-term effects as well.
The burden of education loans and a weak job market has had a trickledown effect which has impacted the ability for young people to make large purchases, such as a house or a car. Eventually, some say, such a weak market may have an effect on whether couples decide to marry, settle down into a career and have a family.