Yes my friends, it's that time of year again. No, not allergy season -- graduation. That seminal moment in our lives when, in ceremonies of varying degrees of pomp and circumstance, our elders pass on the wisdom of the ages to those of us who are evolving from the shelter of the ivory tower to the stark reality of the "real world."
Tens of thousands of graduates will likely hear that Emerson nugget "Hitch your wagon to a star," (currently lurking in countless commencement addresses across the land). Others will doubtless hear the Dr. Seuss classic, "Be who you are and say what you feel, because those who mind don't matter and those who matter don't mind."
Commencement speakers throughout the land face the Herculean task of painting a picture of opportunity and challenge that is engaging, thought-provoking and reasonably optimistic while trying not to terrify or bore.
The good news: this is not a graduation speech. Not one Hallmark card verse (well, maybe one) in this piece. I leave that to the thousands of wizened elders who are feverishly working on their content and delivery of "life in the real world" barnburners at this very moment.
That said, if any prospective commencement speakers are reading, you might consider including some practical advice for the new grads, that just might make their lives easier for the next few years.
1. Learn how to manage your student loans.
If you have federally-backed loans, consider consolidating them. Student loan interest rates are at or near all-time lows. Since the interest rate of the new loan is taken from the average of your existing loans, consolidation could save you meaningful dollars on interest.
But consolidation isn't right for everyone, as it may lengthen your repayment period and could temporarily lower your credit score by adding a "new" account to your credit report. And while private loans cannot be consolidated with federal student loans, consolidating just your private loans at a lower interest rate could be an option if your credit scores are substantially higher now than when the loans were originated.
Here's another trick: By signing up for automatic payments from your checking account, your loan servicer may lower the interest rate, often by a quarter of a percent, saving you thousands.
If you find yourself struggling financially, you do have other options with your federal student loans. The best is called income-based repayment (IBR). IBR allows you to limit your monthly payments to 15 percent of your monthly discretionary income, which is figured out by looking at the difference between your adjusted gross income (AGI) and 150 percent of the federal poverty line for your family size. This varies by state. Based upon this formula, you may even qualify to pay nothing. The program can continue indefinitely, and the reduced payments count toward your forgiveness period, which could be 10, 20 or 25 years.
You can also temporarily suspend payments through forbearance. This may help in a financial emergency. But unlike IBR, the payments you miss under forbearance do not count toward your forgiveness period, which means you'll eventually have to pay them.
2. Use your debt to increase your credit score.
In addition to the benefit of consolidation, student loans can help you strengthen your credit score, if you make timely payments every month.
It's a popular misconception that large student loan debt hurts your credit because it represents such a big chunk of your available debt. Credit utilization (balance/limit ratio) that amounts to about 30 percent of your credit score applies almost entirely to "revolving" credit, such as credit cards, which come with defined credit limits. Student loans, on the other hand, are considered "installment" accounts -- just like auto loans and mortgages -- and carry no penalty for big balances. But the key is paying on time.
3. Manage your credit portfolio.
Everybody's heard of an investment portfolio, which consists of assets including stocks, bonds or real estate. You have a credit portfolio that works the same way. It consists of student loans, credit cards and -- if you play your cards right -- a car loan and a mortgage.
Like investments, credit is a tool we can leverage to buy the things we need. Both require constant management, nurturing and protection. Check your credit reports; review your bank and credit card account activity daily to protect against fraudulent activity; sign up for programs offered by financial institutions that notify you when transactions post; don't provide personal information to people you don't know ("If you see something, say something"); and don't needlessly apply for credit but always be looking for the best deals, rates and rewards.
You can check your credit reports for free each year at AnnualCreditReport.com, and there are plenty of free tools out there, like Credit.com's Credit Report Card, that provide you with an easy-to-understand overview of your credit standing.
4. Do a hygiene check on your Facebook and Twitter accounts.
You heard me right -- I said "hygiene." You wouldn't show up to a job interview looking like you just rolled out of bed, so don't post pictures of yourself having just rolled out of bed, or doing things that you wouldn't want your mother to see. In a world where every word we write, and every picture and video we post becomes another tile in our undeletable digital life mosaic, it is imperative to act appropriately in all social media environments. It's not just your friends and Twitter followers who are interacting with and scrutinizing you. It's also future employers, financial institutions, insurance companies, divorce lawyers, identity thieves, debt collectors -- even government agencies and intelligence services.
Keep these unexpected audiences in mind as you post things. Never show the world your address or Social Security number. Don't tell Facebook you're about to leave on vacation (informing robbers of precisely the right times to visit your place). There's no need to post pictures from the last beer pong tournament either. As for pictures of yourself smoking banned substances, come on dude!
Pro tip: Become Facebook friends with the most critical adult you know and then ask for constant feedback.
5. Manage your identity portfolio.
Your identity, like your credit, is a huge asset. It has many components. And like credit, it can be your best friend or your worst enemy (an enhancer or destroyer), depending upon how effectively and responsibly you manage it.
The "stocks and bonds" of your identity consist of information like your name, email, Social Security number, address, phone number and mother's maiden name (just to name a few). By stealing enough of these "assets," identity thieves can perpetuate fraud in your name, profiting from scams while ruining your credit or worse. If your identity is used to obtain medical products or services, it can even jeopardize your life -- imagine getting the wrong blood type or a medicine to which you're allergic in an emergency situation because someone used your information and their health data was co-mingled with yours. If your identity is used in connection with a crime, you could be arrested or even shot during a routine traffic stop.
The best way to deal with this threat is to stay alert and manage your life portfolios. Limit the amount of private information you share with people who you don't (or even do) know, or institutions you think you know, and make sure that when you share, the data you provide is properly protected.
This is an exciting time for many college seniors. Think about what I have said as it relates to you, and take a moment to reflect upon these wise commencement speech-worthy words from Ralph Waldo Emerson: "Make the most of yourself, for that is all there is of you."