Credit Card Debt Blog

College students today are graduating with more than just a degree — they’re leaving school with loads of debt and little knowledge of how to tackle it.

A survey recently released by The Hartford Financial Services Group reports that a majority of college students are worried about their financial future after graduation, acknowledge feeling unprepared and anticipate having to rely on their parents for help.

Despite a decent job market, heaps of debt and a lack of basic personal finance skills are leaving new college graduates uncertain.

Fayetteville native Amy Zets knows about debt all too well. When Zets graduated in 2004 from the University of Georgia, she walked away with a bachelor’s degree in anthropology, few job prospects and $4,000 in credit card debt.

“Thankfully, I didn’t have any student loan debt,” she said. “I got a scholarship to pay for my tuition and books.”

Only the scholarship didn’t pay for the trip to California to visit her roommate who went to film school, the last-minute dinners with her friends or the trendiest clothing.

Zets had a job working 30 hours a week but resorted to her credit card when ends didn’t meet. She paid her credit card bills on time, usually paying more than the minimum due. But ultimately, after graduation, she sold her car to pay off her debt and joined the Peace Corps.

Many graduates face similar dilemmas, experts say. Often, credit card companies are eager to give plastic to students who have little or no income or credit history. At the same time, student loans are piling up year after year, which decreases the chances that the debt will be paid off before they begin their first job.

By the time an undergraduate leaves school, he has accumulated, on average, $20,402 in debt — $3,262 from credit cards and $17,140 from student loans, according to Nellie Mae, a student loan lender.

Many colleges and universities try to educate students about the consequences of debt.

At Methodist and Fayetteville State universities, freshmen undergo a semester-long orientation class that includes personal finance.

“I teach them about cars and credit cards, which are big things to college kids, and about the future of owning a home,” said Jan Turner, an instructor at Methodist. “We go through interest rates, which some of them had no clue about. We create budgets. Some love it and have already been doing it. Some hate it, and some don’t want to think about it, but they’re being honest.”

Jeff Zimmerman, dean of the Reeves School of Business at Methodist, just finished teaching a course in personal finance and is lobbying to have it taught on a regular basis.

“The course really covers the gamut,” he said. “Investing, life insurance, homeowners insurance, things they are going to have to face once they leave here. The decisions a 22-year-old can make can really set him up for a secure financial future.”

Personal finance sessions also are offered at FSU, but they are sporadic and offered by a variety of groups, said Pamela Smith, a counselor with the school’s Center for Personal Development.

“If a student needs help, we can talk to them or refer them to the right agency that can help them,” Smith said. Student loans

If students have concerns about school loans, the financial aid office might be a starting place, Smith suggests.

Most student loan companies allow borrowers a six-month grace period before payments begin. Ideally in that time, new graduates have gotten a job, a place to live and created a budget factoring in the loan payments.

Student loan borrowers are required to attend financial counseling sessions when they borrow for the first time and when they graduate. These sessions typically inform a student of interest rates, loan balances and payment amounts, according to the U.S. Department of Education.

With the debt racking up, it’s little wonder that finances have become the No. 1 topic of discussion between parents and their college students, according to an online survey conducted in March by College Parents of America. Seventeen hundred parents responded.

The Hartford Group’s survey found that 76 percent of students wished they had more help preparing for their financial future, and 47percent of them said their parents had to bail them out of debt.

Zets, the anthropology major, says her parents haven’t bailed her out, but since returning from the Peace Corps she has moved in with them.

“Now that I’ve been back for a few months I have about $3,000 in credit card debt,” Zets said. “My parents, I don’t ask them for money. They’re fine with it for now. They know it’s not the ideal situation for me right now, but they know that I’m a very organized, efficient, workaholic-type person and I’ll get a job and pay it off eventually.”

Landing a job might take a while, Zets said. Competition is tough and quite often people with bachelor’s degrees compete against those with master’s degrees.

“I’m hoping to get a job with an environmental nonprofit, but I’ll probably have to go to Washington, D.C., to get one,” she said. “Usually, entry level positions make around $30,000, which isn’t anything in D.C.”

For those wanting to stay in state, majors in education, computer sciences, engineering and medical fields might be the way to go.

The North Carolina Employment Security Commission reports that these fields will have some of the fastest growing occupations by 2014. Some of those jobs include teachers, insurance agents, registered nurses, dental hygienists and computer software engineers.

Salaries typically start in the mid-$30,000 to mid-$40,000 range.

Despite earnings potential, the College Board found that most students haphazardly choose a major.

That could help explain why The Hartford’s survey found career planning a top conversation between parents and their children.

“I know my major isn’t for everyone, but I enjoy it,” Zets said. “I think my case was a little different because I went to the Peace Corps, but I know I’m going to pay off the debt eventually.” Staff writer Melissa Willett can be reached at willettm@fayobserver.com or 486-3574.