Your Next Life — Priceless Gifts for the Graduate
Apr 16 2008
College graduation often is the symbolic completion of our children’s progression from the simplicities of youth to the responsibilities of adulthood. However, adulthood comes with a price — the class of 2008 will be graduating with an average of $20,000 in student loan debt and an average credit card balance of nearly $3,000. Financial challenges for new college graduates are further complicated because many of the most promising job markets are clustered in major cities, where the cost of living is substantially higher than national averages.
Financial constraints might explain why young adults ages 18 to 24 are the least likely of any age group to have health insurance, according to the National Coalition on Health Care. In most cases, college graduates are dropped from their parents’ insurance policies when they are no longer enrolled fulltime.
The facts make a strong case for parents to embrace the role of financial advisor as their children transition to the adult world. Make sure they understand what they owe, and what they need to earn to cover expenses and service their debt load. Consider that in the academic world, goals are clear-cut and the ways to achieve them are plainly defined. “After graduation, pathways blur and what was once a solid line through a series of educational institutions has now disintegrated into millions of different options,” according to Alexandria Robbins and Abby Wilner, authors of Quarterlife Crisis (Penguin Putnam, 2001), a book devoted to helping parents and students understand the major life changes that accompany college graduation. “Many college students don’t realize the impact that money, or lack of it, will have on their after-college lives.”
Also, consider purchasing short-term health insurance to bridge the gap between graduation and employer-provided healthcare. Not having health insurance carries serious risks, including having a life-threatening medical emergency without the resources to pay for treatment and the possibility of developing a serious illness that could preclude future coverage. Typical short-term medical insurance, such as the plan offered by MOAA to members, spouses, and children, provides coverage to a lifetime limit of $2 million for periods between 30 days and 12 months for about $50 a month, depending on age, deductible, and terms of coverage. For more information about this plan, visit www.moaainsurance.com/ShortTermMedicalPlan/tabid/62/Default.aspx
With so many job options available, it’s increasingly difficult for graduates to decide on a particular career path, and recruiters are becoming more comfortable with a young person who has held three or four jobs in six or seven years. This is a good time to explore different career possibilities and take a risk while commitments are few and dreams are big, but parents shouldn’t let a young adult’s sense of invincibility discount the importance of prudent financial planning and adequate health insurance.
About the author: Jim Carman is a graduate of the MIT Sloan School of Management and a retired Navy Captain. He writes and lectures on career transition topics.
