College graduates face a competitive job market. "Jobs aren't as plentiful as they once were. Companies have gotten used to doing more with less," says Alexandra Levit, author of "Blind Spots: 10 Business Myths You Can't Afford to Believe on Your New Path to Success."
It's safe to say in the current economic climate, new college graduates have their work cut out for them. What are some of biggest roadblocks they face? Here's a look at five new college financing challenges, along with strategies for dealing with them.
Challenge #1 - Rising Tuition Costs
College costs are rising faster than inflation. According to data from the National Center for Education Statistics, the cost of average undergraduate tuition, fees, room, and board for the 2005-2006 school year was $17,523 (in 2015-2016 dollars), while that amount had shot up to $22,432 for the 2015-2016 school year.
Possible solutions: In generations past, some students could pay their way through school with a part-time job, but that's becoming less and less common. For this reason, it's a good idea to shop around and explore all your options, including public colleges, online programs (see: Is Online College Cheaper?), private colleges with a generous aid program, or community colleges that allow you a later transfer to a four-year program.
Challenge #2 - Large Student Loan Debts
Many students turn to loans to help them figure out how to pay for college. In fact, 68 percent of students graduating from four-year public or nonprofit colleges had student loan debt in 2015, averaging $30,100 per student, according to the Institute for College Access & Success.
Possible solutions: Federal student loans have some consumer protections not offered by private loans such as income-based repayment or loan forgiveness for professionals in certain areas of public service, so look to federal loans and scholarships before private loans. If your interest is not subsidized during school, try to make interest-only payments while you complete your degree to minimize the amount of interest you'll pay after graduation.
Challenge #3 - Unemployment (and Underemployment)
College degrees, pricey as they may be, do not guarantee a job after graduation. Federal Reserve Economic Data shows that the unemployment rate of college grads between the ages of 21 and 24 was 5.6 percent in 2016. Experienced workers who are out-of-work and willing to take a pay cut also make it challenging for recent grads to find entry-level positions. Instead of being unemployed, though, you may find a job that's only part time or doesn't pay enough to sustain you. This is called "underemployment" and is tougher to quantify than regular unemployment.
Possible solutions: To get a foothold in the workforce, Levit cautions recent grads away from being too picky. "Take something that allows you to get a foothold in transferable skills," she says. "Even working at McDonald's you get experience with time management and client relations."
Challenge #4 - Stagnant Wages
If you do land a full-time job, don't expect big pay increases or fat bonuses like some employees saw pre-2008. Census data shows that in 2015, median household income in the U.S. was $55,775, compared to $53,713 the previous year. Data from the Bureau of Labor Statistics also shows that wages have been relatively flat over the last several years. When wage increases fall short of inflation, it means your salary has less buying power than it did the previous year.
Possible solutions: "Do all you can to negotiate upfront," Levit says. "If you don't ask in the beginning, that's going to set the stage for what you can get from that organization going forward." To position yourself for a merit increase once you start a job, strive to exceed expectations. "Take a look at the job description for the next level and make sure you are performing at that level," Levit says. "Keep track of quantitative and qualitative results, whether that's an email from a client about how wonderful you are or the success rate of an email campaign you did."
Challenge #5 - Surging Costs of Living
Living expenses across all categories from food to housing are rising faster than wages. In fact, Bureau of Labor Statistics data shows that in April 2017, the overall Consumer Price Index for All Urban Consumers was up to 244.5 compared to 100 in 1982-1984. In many parts of the country, renting is more expensive than owning a home, but ownership might not be feasible for those with high student loan debt or a thin credit file.
Possible solutions: To deal with these living costs, you might need to get creative. Moving back in with mom or dad may not sound glamorous, but it does save money. The New York Times reports that one in five Americans in their twenties and early thirties live with his or her parents. If that's not an option for you, then look at other ways to cut costs. Instead of shacking up in a swanky Manhattan apartment, consider living with roommates in a less expensive neighborhood. Instead of driving to work, you might forgo a car altogether and ride public transportation, travel by bike, or carpool with coworkers.