For recent college grads, the reality of making a living while handling college debt is proving to be more of a challenge than many anticipated.
According to a new survey, the average recent college currently owes $40,000 in student debt — a combination of student loans and credit card debt. That's a lot of debt considering that more than half (65 percent) of recent grads earned $45,000 or less at their first job after college.
The discrepancy between what they owe and what they make has more than a few recent grads disillusioned with their current financial situation. Forty-two percent of recent graduates surveyed said that when they were back in school, they thought they would have more disposable income than they actually do as an employed recent graduate. That is partly because many (43 percent) expected to receive a higher starting salary.
Those lower starting salaries for college grads have resulted in grads being surprised by how little they can actually afford. Fewer than one in five (17 percent) said they can afford all of life's necessities (defined as groceries, rent, cellphone, car and student loan repayment).
Knowing what they know now about the cost of living, recent graduates said they would have taken firmer control of their finances during college. Nearly a third of recent graduates said they would have pursued more scholarships/financial aid options and another third said they would have pursued a different major that would have led to a job with a higher starting salary. Another third said they would have gotten a job while in college and started saving earlier.
Despite their regrets, many grads are wasting no time improving their financial behaviors.
Eighty percent of those surveyed regularly contribute to a savings account, though only 38 percent of recent college graduates contribute to a retirement account.
Ten percent of those surveyed do not regularly contribute to any type of savings account or fund.
The survey was conducted by Accounting Principals, a finance and accounting staffing firm, which polled 507 recent grads with a four-year degree.