Graduation test: budgeting today

COURTESY TOM MAGUIRE
NEW REALITIES: The class of 2012 at Providence College's commencement exercises in May. A recent study shows Rhode Island graduates carry an average debt load of $26,340.
COURTESY TOM MAGUIRE NEW REALITIES: The class of 2012 at Providence College's commencement exercises in May. A recent study shows Rhode Island graduates carry an average debt load of $26,340.

Figuring out a personal budget is a relatively easy process.
Net income minus expenses equals disposable income. But what happens when that bottom line is close to another number: zero.
“[Students] are definitely shocked [by] basic budgeting scenarios they might see as a recent grad in an entry-level position,” said Sheri Ispir, director of experiential education and career services at Johnson & Wales University in Providence. “They just can’t believe it.”
Today’s college graduates are undoubtedly entering a workforce that remains in less than optimal financial condition.
In 2010, the most recent numbers available, the unemployment levels for new graduates was at 9.1 percent, according to the Project on Student Debt, an annual report put out by the Institute of College Access and Success, an advocacy group that operates in Oakland, Calif., and Washington, D.C.
That same study reported that the class of 2010 faced an average student-loan debt of $25,250 upon graduation and that locals were among those with the highest bills. Rhode Islanders carried an average debt load of $26,340, while Massachusetts residents were saddled with some $25,541.
The Federal Reserve Bank of New York reported last month that student-loan debt has increased by $293 billion since the peak of household debt in late 2008, while other forms of debt fell.
“The cost of education is certainly a growing concern and issue for students and our customers,” said Brendan Coughlin, president of education finance at Citizens Financial Group. “By the time they get to us, most families have thought through the cost side. We try to be helpful in the financing side [and let] them know what their options are.”
Student-loan payments are only one part of the financial world new graduates face.
In order to pay them, of course, graduates need to find employment. But in a difficult job market, workers with new degrees can carry a sense of optimism that might hinder them, local school career counselors say. “When it comes up, we really do have frank conversations of [needing] to be aware of your financial situation,” said Patti Goff, director of career services at Providence College. “I didn’t have those conversations [until recently]. It’s a combination of the economy and the price of higher education that we have to borrow more.”
Ispir said managing expectations is an even greater concern at specialized schools such as Johnson & Wales where, she said, students have very clear ideas about career paths.
High student-loan bills and worry over managing those in addition to other life expenses, including rent and food, she said, leads a lot of students back home if the option exists.
“It’s an easy, and certainly good financial solution,” she said. “[But] it limits your ability to appeal to employers [by crossing] yourself off the relocation list. You’re minimizing the employers that are going to be interested.”
Instead she advises students to think of their dream position as an eventual one and concentrate on securing an entry-level, steppingstone job that can build a resume and, of course, pay the bills.
Johnson & Wales requires students to take a career capstone course that delves deep into financial management.
In terms of student loans, it focuses on consolidation for easier planning. Ispir said that while not every student enrolls enthusiastically, they start paying attention when the budget calculator comes in with its bottom-line numbers.
“It’s all part of their budgeting,” she said. “They need to know what their expenses are going to be if they accept a salary.”
The University of Rhode Island in South Kingstown offers a class called URI 101 that includes budgeting lessons.
While there isn’t a “heavy” focus on money management, Dave Lavallee, assistant director of communications and marketing, tries to emphasize to students that school resources are available. “There are just so many students here; it’s a challenge to meet with every one. They just have to request it,” Lavallee said. “It’s all under the umbrella of having students succeed when they’re finished here.”
Student-loan borrowers are required to undergo exit counseling and have a six-month waiting period before they have to start payments, counselors said.
That also accounts for a delay in reports. The Institute for College Access and Success said debt numbers for the class of 2011 wouldn’t be available until this fall.
There also are many repayment options available and the ability to put the loan into forbearance if a documented financial hardship exists.
Coughlin said such decisions are “very personal” and that Citizens Bank makes all information available to its customers but doesn’t “steer” them in any one direction.
“They have [options] to make sure they get their feet on the ground,” he said. “[We try to be] consultative so that they know they’re making the appropriate decision.
Goff said financial questions are answered in career counseling if they are brought up and that the issue is often inspired, when it is presented, by overwhelmed students who realize they can’t wait to get a job or are worried about additional debt accruement if they are going to graduate school.
She advises continuing students to pursue alternative financing means, including teaching and graduate-assistance positions. For those entering the real world, there is encouragement and practical advice.
“I can tell you that it comes up more than it ever did before,” she said. “If they indicate they’re concerned over finances, I just talk about making sure there’s awareness. If you realize you can’t wait three of four months to get hired, [you maybe take a starter job]. Do that while you’re still searching [for the right job]. You don’t give up in the meantime.” •

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