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MAIN
Education
Advice for the Graduate...
Think
Twice Before You Swipe
It seems like everybody's doing it. Going into debt that
is. Americans are so deep in debt that none other than Oprah
Winfrey has already made it a mission to force America on
a "Debt Diet" with a series of shows featuring families that overspend
to the brink of bankruptcy.
For the recent graduate, going into debt is a clear and present danger.
Out of school with their first real "grown-up" job and paycheck, new
graduates are at high risk for overspending. According to
Dr. Robert Berg, chair of Argosy University/Atlanta's College of
Business and Information Technology, the temptation begins the day
after commencement - if not earlier.
"Banks shower graduates with offers since their research shows that
once people open an account, and are initially satisfied, they are
reluctant to switch banks," says Dr. Berg. "Students
discover credit card financing early on, leading to the notion of
looking in a wallet and knowing you have the power to charge more than
you should. Graduates know that bankers have the money they
need, and often the loans they have taken out to pay for their
education. But, bankers and accountants aren't responsible to
pay back the loans - the graduate is."
So what can a recent grad do to stay on track and be a smart earner
and saver? "Set
up a budget," says Anna Kelly, director of student financial
services of The New England Institute of Art. "It's simple,
easy to do, and serves as a guidepost to help young people learn
to pay off debt, not accumulate more debt, and learn to save too."
The budget, she says, should include everything from rent, transportation,
food, utilities, school loan payments and credit card payments
to entertainment and miscellaneous expenses. "Put some money
away each month into savings," says Kelly. "No matter how
small the amount, you will be better prepared for emergencies."
Any big purchases you have to make, pay cash, says Kelly,
to avoid credit card interest charges.
Amy Shaver, a loan coordinator for The Art Institute of Seattle,
says that many students now try to pay down or pay off credit
card debt before graduating so "they can focus on paying
off school
loans as soon as they begin to get a regular paycheck."
If a student does run into problems paying off a loan or credit
card debt, Shaver recommends contacting the lender immediately
to begin to work out a payment plan.
This is a smart strategy says Larry Lipner, director of administrative
and financial services at The Art Institute of New York City. "Students
should pay off credit card debt first as they incur the highest finance
charges, and school loans, after as they tend to have much lower
interest rates," he says. "By paying off debts monthly
without being late the student is actually establishing a good credit
history with the credit bureaus which will serve him/her well in the
future translating into a better credit score."
Debt has become such a looming issue for all Americans, not just recent
graduates, that many schools are devoting whole courses to it. "The Art
Institute of New York City offers a freshman level course that includes
consumer debt and how to handle it," says Lipner. "It's
important because many students come to school without the basic
knowledge of how to manage their personal finances."
For students who have problems with credit card debt, there
are places to go for help. Two that Amy Shaver recommends are
http://www.debtadvice.org/aboutus/aboutus_01.html and
http://www.debtadvice.org/PersPlans/guidelines_credit-counselor.html .
To sum up, Dr. Berg defines the clear choice that graduates should
make: "The choice is to make more than you spend, or spend
less than you make - a simple rule that is sometimes hard to follow."
Courtesy of ARA Content
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