For the past couple of months, families everywhere have been celebrating their graduates, buying gifts, throwing parties, and surrounding them with good wishes. It is a very joyful time, and one that should be remembered for years to come. Commencement speakers do their best to instill words of wisdom about the future. They inspire students to go for their dream, never give up and reach beyond their perceived limits. They tell them everything, except how to get out of debt.
Once the well-wishers leave and the gaiety settles, graduates will wake up to the reality that the accolades are over and it’s time to pay the bills. Student debt will become a way of life for many, as they struggle to find their first real job and establish careers.Last week, the high cost of college was brought back into the spotlight when President Obama signed the student loan forgiveness bill called Pay As You Earn (PAYE). I like the sound of that.The bill allows the student loan borrower to pay 10 percent of their monthly income to keep from falling behind in payments. This will be a huge relief to young grads who want to do the right thing, but whose income does not yet match their bills. If payments are done on time, loans will be forgiven in 20 years, 10 years if the borrower works in public service or a nonprofit.
There are over 37 million Americans in debt with a total student loan debt accumulating to more than 1.2 trillion dollars, If you’ve ever had student loan debt that you could not pay, then you know the government doesn’t play. They can garnish you check and seize your bank account. All of this may seem a bit unfair, especially for young people who listened to the advice to pursue higher education, but couldn’t find a decent-paying job. In addition to laws that make higher education more affordable, there needs to be more emphasis on training students for work that does not require degrees. Everyone is not traditional college material, but they need to have the skills to have a successful career. That’s where job training programs and vocational schools come in.
It will be at least 18 months before the new program is implemented, but college-bound families should create their game plan now. Students should look at where they want to go, and come up with a financial plan that avoids debt as much as possible. Go for grants, scholarships and work study. Consider extending your college career if that will buy more time to come up with alternates to student loans. At the end of the day, what matters most is doing what you love and earning a high enough income to live a decent life. I believe this generation is more than ready for the challenge. Congratulations to graduates everywhere on your major achievement.