Mull job outlook, major, debt load

Q. My daughter is going to college next fall, and I worry about how we are going to pay for it. We didn’t get any financial aid because we have good jobs. But I’m in a profession with a lot of layoffs, and I could lose my job while she’s in school. I suppose there is nothing I can do now, except encourage her to consider nursing. She seems to like the idea. I figure she will at least get a job.

A. You are wise to encourage your daughter to think about job prospects at the end of college.

Many economists expect the unemployment rate to stay above 8 percent into 2012, before beginning to improve. Even after that, the expectation is unemployment could remain elevated for years, perhaps around 6 percent, rather than the less-than 5 percent level before the recession.

So majors and job selection will be important, especially for students who take on considerable debt.

Clearly, even under good job conditions, students should not take on more debt than they can expect to pay off effectively in the type of career they are planning. And parents cannot afford to pay so much for college that they endanger their retirement years.

Sandy Baum, an analyst with the College Board, suggests students try to keep college loan payments at no more than 8 percent of their expected gross income.

The average student who borrows for college leaves school with about $20,000 in loans. At the recent Stafford loan rate of 6.8 percent interest rate, monthly payments will be about $230 for 10 years. For a rough idea on possible salary, students can go to Salary.com or The Mint (themint.org/kids/starting-salaries.html). Then, compare the salary with loan costs using http://apps.collegeboard.com/fincalc/sla.jsp.

In this environment, even the best plans can go awry. For example, while nursing is typically considered a profession with plenty of jobs, recent nursing school graduates have said they are having trouble finding jobs because older, part-time nurses are going to work full time as husbands lose jobs.

When you try to match your plans with college debts, try to obtain up-to-date information about career possibilities. College placement offices or faculty members in certain departments might be able to give you a sense of job prospects for this year’s graduates.

But remember that a college education is for the long term. So while the environment is daunting, students do not have to abandon education plans as long as they think carefully about expected pay and debt levels.

The College Board’s research has indicated that although paying for college is difficult up front, the typical graduate of a public college earns enough by age 33 to compensate for the expenses for college tuition and fees. And over a lifetime, a college graduate makes about 73 percent more than the average high school graduate.

The important point is to think about what you are doing with your education and not to make knee-jerk decisions, such as taking on $50,000 in debt to try to be an artist or social worker.

Also, college students must make sure they take on the right kind of debt: federal student loans rather than private loans with higher interest rates. Find federal Stafford loans, Perkins loans and perhaps low-interest state government loans through your college financial aid office.

Although you might not have qualified for aid, go back to the financial aid office if you lose your job and ask them to reconsider because of your new financial condition. Some offices will require you to wait until the next annual application process in January. Others try to make sure students don’t leave college as a result of the situation, said Jim Scannell, president of college consulting firm Scannell & Kurz Inc.

Even if you’ve been denied financial aid for this fall, you could explore possibilities. Although official application deadlines have passed, some small, private colleges are trying to fill their classes and will offer financial aid as an inducement.

XGail MarksJarvis is a personal finance columnist for the Chicago Tribune and author of “Saving for Retirement Without Living Like a Pauper or Winning the Lottery.” Contact her at gmarksjarvis@tribune.com.