Worst Paying College Degrees: Surviving Student Loans
Most people nowadays know that one of the worst paying college degrees includes those like a Liberal Arts college degree. With unemployment rates so high, what people don’t realize that many positions requiring four year business, marketing, or technology college degrees pay a starting wage of $10 to $12 an hour, or pay solely on commission. Another critical factor is that people don’t know how to survive the aftermath of receiving one of these worst paying college degrees.
To give you an idea how bad things can be I’ll tell you about a real job advertisement example a friend told me about. The company required a four year IT or Computer Science degree, five years of experience in a server environment, and Microsoft Server certifications. The job was also seasonal and offered no work during the summer. Most people I’ve asked expected this job to be salary-based, pay during the summer, and also pay at least $20 hourly, or $38,400, before benefits. But, no, it was hourly pay only, and that was $10.50 an hour. How did IT suddenly become one of the worst paying college degrees ever?
Kal Chany, author of Paying For College Without Going Broke, points out to the Star Tribune how most people get in trouble with college degrees:
“The selection process now should be based upon where you can afford or could get merit-based money. Most people make the mistake of assuming high-school counselors know this stuff. Or people assume that nonprofit colleges and universities are charities. You should view purchasing a college like any other consumer transaction. Schools are spending big on marketing and branding. Most people are very naive and think that they know what they’re doing when they don’t. A college degree doesn’t guarantee a middle-class lifestyle, especially given the large debt loads kids graduate with today. The worst thing is to incur lots of debt and not have work income.”
Such news is probably very discouraging to those researching potential careers. But let’s help you avoid a blowout further down the road.
The first tip is to avoid taking a student loan if possible. Work through college if you can do so. If you must take out a student loan based upon your situation make sure the resulting job market will be enough to pay your bills and your student loan. Monster.com’s Charles Purdy told Forbes what job market prospects newly minted college graduates might expect:
“We’re definitely seeing more contract or project-based opportunities. You can’t [easily] walk out with a degree and straight into a job where you will be for the next [few] years.”
Basically, what this means is that you’re considered self-employed and you are taxed like a small business. You typically receive no benefits. If your pay is considered 1099 tax form income you do not pay FICA taxes, but this also means you do not receive unemployment benefits in-between contracts and no money is going toward your supposed retirement under Social Security. So if you are stuck in this situation you need to save up for the downtime between contracts. You should also create your own self-directed Roth IRA since your work won’t offer you a 401k.
With Obamacare coming down the pipeline you will also need to set up your own health insurance plan as a small business, probably by using one of the state exchanges so it’s affordable. Or, you can simply pay the tax fee for not having health insurance.
According to The Market Oracle student loans are highly likely to become the next major financial crisis because these loans are backed by the Federal government:
“Outstanding student loan debt has surged 165% in just seven years, from $360 billion to $956 billion. Furthermore, the average loan balance for U.S. college students has increased more than 68% since 2005 to $27,000.
“Eleven percent of all student loan balances are 90 or more days delinquent, surpassing all other forms of debt. Credit cards, car loans, and mortgages are all in better shape than student loans, with 90-day delinquency rates of 10.0%, 4.3%, and 5.9%, respectively.
“According to the Federal Reserve, student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008, and it is the largest form of consumer debt outside of mortgages. What’s more is that unlike credit card debt, student debt is not forgivable in bankruptcy.
“Because student loans cannot be written off through bankruptcy, those in their 20s, 30s, and 40s who are buried by debt cannot afford to buy cars, mortgage a house, invest in the markets, or begin to save for retirement. And chances are, those who are forced to move back in with their parents to make ends meet will postpone getting married and having children. Students who default or struggle to pay their loans also can’t afford to buy their own cars or do much of anything else for the U.S. economy.”
So when you are considering your financial future judge wisely and try not to choose one of the worst paying college degrees. Or, if you really want to be a computer guy, at least consider working while earning that degree on the side.