Following the news lately, I'm reading some terms that I haven't seen since I was a high school student studying early American history and reading David Copperfield. Articles describing the student debt crisis are now throwing around the terms "indentured servants" and "debtor's prison" to describe the plight of young graduates who can't afford to pay back their loans. I remember being taught that these practices were inhumane, and can hardly believe I live in a time when people feel this is their plight, and that the federal government is enforcing the terms.
Most people don't realize it, but debt is now the primary mechanism for funding college. Unsecured debt is always a gamble, however, and the odds of striking it big with a college degree shrink as the ranks of college-educated Americans expand. The fear of downward mobility is what drives so many young people to attend college, but ironically it appears that college may actually be contributing to downward mobility for this generation.
These are clearly treacherous times for young people, and the standard "old school" advice that once worked so well for prior generations can clearly do more harm than good now, if followed blindly. This generation has to be more cautious and more circumspect, to avoid winding up "underwater" by owing more on their college degree than it is worth in the current marketplace. With the best of intentions, here are a few suggestions for beleaguered members of what is now being labeled "Generation Screwed:"
Caveat Emptor: In any economic transaction, the buyer is the one who needs to beware. This applies to making a decision about purchasing higher education, which is one of the most costly transactions a person will make in his or her lifetime. If you are in a position to need to borrow money to finance this transaction, you must do your due diligence to ensure that your degree will pay back enough to finance the cost of earning it. If not, go to community college or go part-time and pay as you go.
Take Advantage of Income-Based-Repayment: Astonishingly, few people are taking advantage of new "Pay as You Earn" provisions for federal debt. This is a no-brainer. Go here immediately to see if you qualify and if you do, sign the heck up! What on earth are you waiting for?
Hire Yourself. True, the unemployment figures are discouraging, but the free enterprise system is always hiring. Start a business and hire yourself if no one will offer you a decent job. Chances are you also know several other talented but unemployed fellow graduates, so you can pool resources and launch your own venture. You can obtain free business advice on getting started from SCORE.
Consider Coworking. New coworking sites, where bootstrapping entrepreneurs share working space, are springing up nationwide. This is a great way to build a business on a shoestring while connecting with other start-ups. Learn more at the Coworking wiki page.
Go Inland. Believe it or not, there are places that are still hiring. Many of them are not on the coasts, however. Right now, you will find lower unemployment in the Dakotas, Oklahoma, Utah, and Iowa. Earlier generations have pulled up stakes in search of brighter opportunities; you can too.
Look Into Jobs That Carry Loan Forgiveness. If you have a lot of federal student debt, you should consider working in fields that offer the possibility of loan forgiveness as a perk. Low wages in childcare suddenly look a lot more appealing if it can help wipe our your accumulated debts. To learn more, visit the government's website on public service loan forgiveness.
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