Kelsey Gee wrote an article which appeared in the May 13-14 edition of the Wall Street Journal entitled “Outlook is Rosier for Class of ’17”. Good news for a change. According to the executive search firm, Korn/Ferry International, salaries, adjusted for inflation, are expected to be up 14% from 2007 for undergrads. The overall average is expected to be a tad under $50,000; however, the average for software development is $65,232; engineers, $63,036; actuaries, $59,212; and scientists and researchers, $58,773. A survey conducted at Adelphi University indicates that 2/3 of those responding had at least one job offer. But, the executive director of career services at Adelphi warned that only about 30% of the class responded to the survey. He also warned that the average student could expect a 6 month search before landing a job.
A good many of these graduates have federal student loans. If so, then the student has a six month grace period before payments begin for Stafford loans, and a 9 month grace period for Perkins loans. There is no grace period for Parent Plus loans.
If you have a subsidized Stafford loan, the government is paying the interest until the end of the grace period. However, if you have an unsubsidized Stafford loan, you are being charged interest from the time you draw down the money. The unpaid interest in capitalized onto the principal, so you are paying interest on interest. Not a good situation (especially if you are a graduate student and are accumulating loans over 5-7 years). My advice to the undergrad is to contact your servicer upon graduation (or the start of your job) and make arrangements to pay down the interest that is accruing. It will save you a few bucks.
Also, if you are working in the public sector or a non-profit, look into the Public Service Loan Forgiveness (PSLF) program. If you are qualified and make 120 payments, you can be eligible to have the remainder of your student loan debt forgiven tax free. Be careful, though, because you have to have the right type of employer and the right type of payoff plan for this program to kick in. If you need help in this area, contact a qualified student loan lawyer
And for those students who do not find a job, my advice is, DO NOT let the servicer talk you into applying for a forbearance. There are better ways to deal with this situation.