College Grads Need to be Financially Savvy

Graduation is always a special event at our nation’s community colleges. For many of these new graduates, the associate degree represents not only achievement of a long-held dream, but also a smart investment in their financial futures.

One of the financial advantages of attending some community colleges is that they enable students, in certain cases, to complete their first two years of college with little to no student loan debt, thanks to opportunities for financial aid and the modest tuition levels available. But for the many young people graduating from four-year institutions in our country, the financial picture is not quite so favorable. According to a recent study sponsored by Fidelity Investments, the student loan debt burden carried by recent college grads has grown to record high levels.

In their online survey targeting a national sample of college students in April, 2013, Fidelity found that about seventy percent of the class of 2013 is graduating with student loan debt averaging $35,200, including federal, state, and private loans as well as credit cards. This is a staggering amount that is significantly higher than in previous years. Among other key findings of the survey:

• 50% of the class of 2013 were surprised by how much student debt they had accumulated;
• 39% said they would have made different choices if they had known in advance about how much debt they would accrue;
• 57% said they could have done a better job of paying for college by managing their spending and starting to save earlier.

The message we can all take away from this news is that most students entering college are woefully unprepared to plan for and manage their student loan obligations. This, in turn, impacts their ability to save money, build assets, and achieve financial security throughout their adult lives.

Center for Financial and Economic Education Offers Information and Tools

One of the goals of the CFEE is to help prepare students for these economic realities by offering practical tools to understand the benefits of a college education, as well as the impact that student loan debt will have on their financial lives post-graduation.

We do this by incorporating information into our workshops and classes that help students to figure out how much they can expect to earn when they graduate and how long it will take them to pay off their debt once they start working. This is usually an eye-opening experience, but one that helps students think twice about the loan obligations they may be taking on.

While certain community colleges and other institutions of higher education can serve as an effective financial reprieve for students, they also can be a source and center of financial information, resources and tools to enable greater levels of financial literacy for students while in college and, importantly, in their post-graduation lives.

About the Author

Suzanne Matthews is the Director of the Center for Financial and Economic Education at Westchester Community College. Prior to joining the Center, Ms. Matthews was founder and principal of Finance in Focus, a consulting practice providing financial literacy training and education to businesses, nonprofit organizations, and government entities. Her professional background includes over 25 years in the financial services industry, working in corporate finance and investment banking at Bank of America and HSBC Securities. As a financial education consultant, she coordinated programs for both private sector and public sector organizations, including the Westchester County Department of Consumer Protection and the YWCA of the City of New York. She is a frequent speaker on personal finance topics and has participated in educational programs at the New York Public Library and the Museum of American Finance. Her educational background includes a B.A. from the University of Michigan and an M.B.A. in finance from Columbia University.