College graduations are a time for inspirational words and optimism about the future. But the post-college world can also bring sobering realities.
Educational services company Cengage surveyed 2,500 recent and upcoming graduates for the Cengage Student Opportunity Index and found that respondents, on average, believe it will take six years to pay off their student loans.
In reality, it will take closer to 20.
Cengage found that 51% of the recent and soon-to-be college graduates surveyed have student loan debt, with an average reported total of $22,919 in student loans upon graduation. And some estimate these totals may be even higher. According to Student Loan Hero, 69% of students from the Class of 2018 took out student loans, graduating with an average debt balance of $29,800. And according to the College Board, the average cumulative student debt balance in 2017 was $26,900 for graduates of public four-year schools and $32,600 for graduates of private nonprofit four-year schools.
The Department of Education reports that the typical repayment period for borrowers with between $20,000 and $40,000 in federal student loans is 20 years, and a 2013 study of 61,000 respondents conducted by One Wisconsin Institute found that the average length of repayment for student debt borrowers is 21.1 years.
And loan repayment is not the only dimension of post-college life where new grads' expectations may differ from reality.
Job site Monster recently surveyed 350 soon-to-be graduates and found that 59% expect to find a full-time job in less than two months and 28% expect it to take less than one month. Cengage reports that 93% of near-graduates believe they'll land a job related to their educational background within six months of graduating — but only 60% will do so.
LendEdu analyzed a College Pulse survey of 7,000 college students from nearly 1,000 colleges and universities and found that students, on average, expect to earn $60,000 in their first job out of college. But the National Association of Colleges and Employers (NACE) calculates that the average starting salary for graduates from the class of 2018 was closer to $50,004.
Nevertheless, 82% of those surveyed by Cengage are optimistic about their futures — and with good reason. In 2018, college graduates earned weekly wages that were 80 percent higher than those of high school graduates. Workers with bachelor's degrees reported median weekly earnings of $1,173, compared to $712 a week for those who have a high school diploma.
"One thing is clear to me: college remains a solid investment. But students are largely underestimating how long it takes to pay off their student loan debt," Michael E. Hansen, CEO of Cengage said in a statement. "This means they're probably not prepared for the life choices they'll have to make, like putting off buying a house or starting a family. Everyone involved in the higher education system must work together to lower college costs beyond just tuition."
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