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May 14, 2008
FOR IMMEDIATE RELEASE

Financial Tips for 2008 College Graduates

NORTHAMPTON, Mass. -- ’Tis the season for college graduates to leave behind their campus comforts and step into the proverbial “real world.”

Whether graduating from a small liberal arts college or a large land-grant institution, members of the Class of 2008 will be confronting the realities of today’s limping national economy.

“Money comes in hard and goes out easy,” says Randall K. Bartlett, Smith College professor of economics, who offers practical financial tips to students through the college's popular Women and Financial Independence (WFI) program. “How you plan your finances now can have huge ramifications on how your life will play out.”

Bartlett recently offered his advice on the issues graduates will soon face.

Jobs
The good news for those about to graduate is that the job market is still strong historically with a national unemployment rate of just over five percent, Bartlett points out. That means most Smith graduates will be able to secure a job, though it may not be their dream job.

“These are interesting times,” Bartlett says. “Nobody knows for sure what the economic future looks like. But I think most students are finding, or will soon find, something.”

For those who don’t find employment quickly, Bartlett recommends casting a wide net, applying for many different positions, and keeping an open mind about relocating.

Health Care
Health care is expensive, there’s no way around it. Depending on where you live, there are alternatives to full coverage, such as plans that cover only catastrophes, with high deductibles, an appealing option for some young people. A group plan with employers is often the most affordable package.

For those lacking that option, check what plans are available, says Bartlett, depending on which state you’re living in. Above all, he advises, “Don’t go without some kind of health care. It’s a very high risk.” With today’s prices, one unfortunate accident or malady can turn into years or decades of medical debt.

Housing
Housing costs depend largely on where you go, says Bartlett. The same money you might pay for a modest loft efficiency in Chicago could buy a sizeable condo in Utica, New York or Fargo, North Dakota. If you plan to move to Boston, New York City or San Francisco: Good luck. It’s no secret that the cost of housing in those cities is among the highest in the country.

So, don’t lose touch with your college roommates. If you were comfortable living with them before, it may be benefiical to do so again. “For most recent graduates, the way to make housing in the most expensive cities possible is to recognize that you will need to find others to share the cost,” says Bartlett.

Debt Management
An important issue for recent graduates, student debt will likely play into most budgets for the immediate future. The average college student graduates with $30,000 in student loans soon due, says Bartlett. And, many also carry thousands in credit card debt.

Consider management of student debt within the context of other money owed, such as to credit card companies. Become well-educated about student loans, the possibilities for consolidation, the tax consequences and how best to match the payback periods to individual earnings.

“There is no one-size-fits-all formula for handling student loans,” says Bartlett.

Most importantly, do not get caught in the credit card web of owing more than you can pay off on a monthly basis. With credit card interest rates typically hovering between 16 and 20 percent, it’s a losing financial proposition to carry debt to credit card companies.

Bartlett cites the following scenario in his WFI lectures: If you have $3,000 in credit card debt and pay only the minimum remittance each month, it would take 18 years to pay off the entire balance. That’s a lot of interest.

Investment
Regardless of the state of today’s economy, graduates face one great danger and one great opportunity, Bartlett explains. The danger is out-of-control credit card debt. The opportunity is to begin a long-term investment program at a young age.

“Take advantage of compounding interest on investments,” he says. “If students invest even a tiny amount regularly and let it build for 30 or 40 years, the payoff by the time they’re at retirement age will be astronomical.”

Cost of Living
Food prices are likely to continue rising as energy costs increase and as the world transitions to ethanol development for an energy resource. Daily transportation, clothing and entertainment are also on the rise in the current inflationary economy, notes Barlett.

Despite today’s high cost of living, lifestyles can be managed by budgeting. Bartlett recommends graduates begin to keep track of where their money is going by writing down every time they spend, even in small amounts.

“At the end of the day, you have to make sure that what you spend doesn’t exceed how much you bring in,” says Barlett.

About Smith
Smith College educates women of promise for lives of distinction. By linking the power of the liberal arts to excellence in research and scholarship, Smith is developing leaders for society’s challenges. Smith is the largest undergraduate women’s college in the country, enrolling 2,600 students from nearly every state and 61 other countries.

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Office of College Relations
Smith College
Garrison Hall
Northampton, Massachusetts 01063

Kristen Cole
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T (413) 585-2190
F (413) 585-2174
kacole@email.smith.edu

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