With a degree in hand and bleak job market ahead, one recurring nightmare for recent college graduates can be paying off student loans.
“It’s scary,” senior health science major Anna Gutierrez said. “It’s really hard to find a job after graduation to pay off the loan.”
The student-loan delinquency rate has increased from 12.4 percent in 2005 and 2007 to 15.1 percent in 2010 to 2012, according to a report by FICO Labs, a department within the Fair Isaac Corporation. The report concluded that students in the United States currently taking out student loans are subject to greater risk at defaulting on them, or not paying them off.
“There’s too much debt in relation to the amount of income that students are going to realistically earn,” Cal State Long Beach economics professor Lisa Grobar said. “The debt burdens are starting to become unsustainable and unsupportable.”
The FICO Labs report also said the average debt for student loans nationally increased from $17,233 to $27,253 between 2005 and 2012. That is nearly a 58 percent increase in average student loan debt within a seven-year period.
However, according to Cal State Long Beach President F. King Alexander, of the 36 percent of CSULB undergraduates who graduate with student loan debt, the average amount of debt is $13,500.
“Most student-loan delinquencies are graduates that paid $30,000, $40,000 and $50,000 to get a private high-priced education,” Alexander said via email.
According to Alexander, current undergraduate students do not have to pay back their student loans until after they graduate, and many graduate students can have them deferred as well.
CSULB economics professor Heather Stephens said that the student loan crisis is due to the poor economic climate and lingering unemployment rate in the United States.
“The unemployment rate for recent college graduates continues to be greater than everyone else nationally,” Stephens said. “Getting a job after graduation is the highest indicator of not defaulting.”
Junior political science major Juan Solorio said he is concerned that the high competition in the job market will get in the way of him paying off his student loans.
“This is a job market where everyone is competing, and there are not enough jobs to keep up with the number of students graduating each year,” Solorio said. “Everyone our age should definitely be concerned.”
CSULB Director of financial aid Nick Valdivia said students can plan ahead in paying off their loans by only borrowing what is absolutely necessary to pay for their education. After graduation, Valdivia said that the most important thing for students to do is to maintain contact with their loan servicers because they can provide them with payback options.
“The loan servicers want to work in partnership with the students as nobody benefits from a defaulted loan,” Validivia said via email.
In order for students to be better prepared to pay back their student loans, Stephens said that job experience is key. She said experience like internships and part-time jobs will make students more competitive for a job that pays well after they graduate.
“In a tight economy, you want to make yourself as competitive as possible for the jobs that are out there,” Stephens said.
