As thousands of college students receive their diplomas, the graduation celebrations also sets the clock ticking on student loan payments.
“Your education is a powerful investment — it gives you the potential to get a better job and better earning potential,” said Ernie Almonte, chairman of the American Institute of CPAs. “But it’s both a financial and educational investment. If you have this debt, my advice is you probably have six months to start making payments, so start looking for employment.”
Almonte said graduates who can’t find work in the fields of their study should seek part-time jobs as a means of paying back their loans.
“You have to make your payments and you have to make them on time because it will affect your credit,” said Almonte.
The average student exiting college this spring will have a debt of more than $24,000, and many don’t realize just what that debt means to their future. Failure to pay will impact credit rating, which could hurt them for years to come when they attempt to buy a home or get other high-dollar lending.
Some are getting into worse shape by adding to the student loan debt with credit cards, which Almonte called a potential disaster. He and fellow CPA Claire Levinson stress graduates should make sacrifices in order to pay off their student loans as quickly as possible.
“What they really need to do is to cut their spending, we don’t want them digging a hole even deeper, we want them putting as much toward that debt as quickly as they can,” Levinson said. “They’re putting off marriage, putting off having children, putting off buying a home and putting off investing in retirement accounts.”
Between 2004 and 2012, student loan debt in the U.S. nearly tripled to $966 billion — the biggest non-mortgage debt burden in America.