This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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.

In real-world terms, that means not taking out a loan that will set you back more than $200 per month if you expect to land a job that pays $50,000 per year, Pickens says.

The calculations will take some research (especially on career fields and entry level salaries) but if more college students did that research, they could save themselves big headaches down the road.

"Remember, student loans are one of the only debts that you cannot get rid of. They'll be with you forever -- even if you file bankruptcy," Pickens says.

Huge student loan debt can also add unneeded pressure to young white-collar professionals.

"Some people have to work high-pressure jobs forever because of the loans they took out," Pickens said. "Student loans will force you to work a certain job. If you're careful with student loans, then you get to choose the career."

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.46 1.90%
FB $117.96 -0.51%
GOOG $696.24 -0.28%
TSLA $236.77 -2.10%
YHOO $36.20 -0.92%


Chart of I:DJI
DOW 17,780.25 -110.91 -0.62%
S&P 500 2,065.22 -16.21 -0.78%
NASDAQ 4,778.7780 -38.8160 -0.81%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs