The world looks very different to graduated students with student loans. Whether $10,000, $40,000, or $200,000, the post-grad with student debt lives in a different financial system than the student without. In the job market, the student with debt is treated the same as the student without. Regardless of the difference, there is a fundamental lesson for the college graduate that changes the way the post-graduate approaches employment.
Students go to college because it is needed to get a "good job" in today's economy. Or they want to "make a difference." The good job is supposed to come with higher pay, particularly for the long-haul. Making a difference often is an inherent side-effect of the degree, but can also be a core feature of one's employment.
When looking for jobs after graduation, there are a couple of trends I have noticed. The first is that those in the applied sciences (e.g., engineering) are immediately valuable and in demand. The second is that those in the humanities are not in demand for anything but their ability to handle a project and adapt to a variety of duties.
For those in the applied sciences, wages appear to be higher than average, and potentially pay-off quickly. For those outside the applied sciences, the balance between degree and income is far more complex.
Post-graduates with student loan debt need to be especially mindful of their future incomes. Starting incomes are often low and are offered at generalized jobs that do not require much specialization. Which is great -- otherwise, where in the world would someone with a degree in English Literature ever work, other than a bookstore?
Debt creates an economic problem between the degree-seeker, their debt, and the job market. While a college degree prepares a student for a variety of encounters after school, if the jobs they are "qualified" for or are hireable only pay so much, their degree could be for naught.
The degree is for naught when the monthly payment amount on the loan drives the net income of the worker to near, at, or below the amount they would have made without a degree.
When talking about the poverty line, this consideration needs to be taken into account. For instance, if someone took out a $40,000 loan, which will enjoy a payment of roughly $350 per month for ten years, their net income would need to exceed the amount they would have made without the degree.
And the calculation isn't just that simple. Foregone wages have to be taken into account in this calculation. A student doesn't just have $40,000 in student debt, they have that amount in student debt PLUS the foregone wages at the best job they could have gotten for the entire duration of the degree.
Sure, someone without a degree isn't all that valuable on the job market anymore, but would they not become valuable given the same amount of effort of college applied to a workplace or apprenticeship?
The amounts in student debt that my generation is leaving their college career with is crippling. The jobs available are not paying enough in relation to this big debt that some college graduates face. The amount of debt needs to start paying for itself quickly, or else it wasn't worthwhile to begin with.
Poverty line shifts when student loans are involved. Of course some students have their loans or schooling paid for by parents, but that doesn't change the economic reality that college costs money. And college has hidden costs that are rarely or never accounted for.
For those with student loans, the poverty line is shifted because wages are directly curtailed by student debt for a full third of one's career. If student loans cost someone $400 per month for ten years, that is $4,800 in lost wages off the net annual income of the post-graduate.
If money is a motivator, or at least a controller of one's destiny, the presence and amounts of student debt are fundamental determinants of one's success after school. And a post-graduate should calculate their real income with student loans deducted.
I think I just coined a new concept: "Real Income." I consider this word to mean one's net income, including taxes, medical insurance, and student debt payments. The reason being: The amount you actually make is the amount that is left over after the absolutely mandatory deductions are removed from the amount you think you make.
No comments:
Post a Comment