Student Trap: So Much Loan Debt Companies Won't Hire You
NEW YORK (MainStreet) -- Student loan debt continues to be a big problem for college graduates, their families and the economy, including this wrinkle: Students may take on so much college debt in pursuit of better jobs that they actually may drive away good employers.
According to an August study by Fidelity Investments:
- 70% of the Class of 2013 is graduating with debt, averaging $35,200.
- 59% report they chose a specific major in hopes of securing a higher-paying job.
- One-half say paying off their student loan debt is now their the top financial goal.
- 39% would have made different choices related to college planning had they understood the total cost of college.
The problem gets much worse with a report from the public policy group Demos that says about half of U.S. companies check a potential employee's credit before making a job offer -- and about one in seven job applicants are turned down for a job based on a "blemished" credit score.
College grads that fall behind on student loan payments, then, flirt with career disaster. According to the credit reporting agency FICO, a college loan borrower who falls behind on payments can expect a credit score decline of 100 points -- a drop that could well prove problematic in landing that post-college dream job.Jared Pickens, a senior lecturer in finance at the University of Texas at Dallas, says that the goal with student loans is to make sure they don't exceed 5% to 6% of the gross salary a college student expects to make after graduation.
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