With the economy on the rocks, students need to start preparing for a shaky financial future.
The Dow Jones Industrial Average dropped 449 points Wednesday, reaching the lowest point since November 2005. The NASDAQ composite similarly reached its lowest point since August 2006.
College students are sometimes shielded from the full effect of an economic downturn. While students might not feel it now, they will after graduation when job searching and home ownership become larger concerns. This is an especially bad time for students to find themselves in debt.
While all debt is hard to avoid, credit cards and loans with extreme interest rates can leave a graduate in a deep hole. A $5,000 loan with a 12 percent interest rate will produce $9,000 in debt after five years.
These loans, especially when used as consumer debt, will be hard to pay off on top of other expenses while moving into the workforce. Paying off more than one will take several years. With the turbulent economy, taking a chance with such high rates is a bad gamble.
If student loans are unavoidable, students should rely on government subsidized loans with much lower interest rates. Aside from subsidized loans, government grants are an excellent resource.
Finally, college is an ideal time to save. Absent of any major expenses beyond school, students are in a great position to put away some money for a rainy day.
With the economy struggling, the workforce will become more competitive. If graduates can’t walk straight into a lucrative profession after graduation, tough. But they should prepare now to enter a flagging economy by saving and eliminating personal debt.