Graduating into economic doldrums
By Lucy Lazarony • Bankrate.com

When they entered university, things couldn't have been better. The economy was booming. Jobs were plentiful and so were perks and signing bonuses.

Making the leap from college to the real world and a high-paying job was a snap.

Those days are over.

Today's college seniors are graduating right into a much less-robust economy, one full of layoffs and fierce competition for the few openings.

"The ones who are graduating right now are entering at a very difficult time. The jobs that are available are limited," says Philip Gardner, director of the Collegiate Employment Research Institute. "You've got last year's class, this year's class, people who've been laid off. There's a lot of educated labor out there that needs a home."

The job market for college grads started tightening in January 2001. All the graduating classes since then, plus all the laid-off workers, are angling for the same few jobs.

With an uncertain job market looming, many college seniors are worried about what happens after graduation day.

"It's a bummer," says Anya Huppman, a senior who is majoring in political science administration at University of California, Riverside.

"Someone like me, I have a really good resume, and I have a lot of experience. I think I would do well, but it's going to be such a struggle to find a job."

Huppman, who is set to graduate this spring, started her job search several weeks ago.

"I think about it every day," says, Huppman. "I don't want to be one of those seniors who moves home and then starts searching for a job."

Other students are moving home before they finish their degrees. Wary of slowing economic times, they've left their dorms and student apartments and moved back in with their parents to save money.

"A lot of students I know have moved home -- especially the seniors," says Daniel Olivares, a senior at California State University, Northridge. "They're commuting now."

Like many of his classmates, Olivares is concerned about finding a job in tight economic times.

"Yes, I do worry about that," says Olivares, a finance major. "However, I tend to look at the whole thing optimistically because the economy is always going to be up and down.

"I'm going to keep my options open and take whatever kind of job is available at the time."

Flexibility is key
To crack a difficult job market, new grads will need to be flexible. They may have to relocate or take a job outside their chosen field. It's important to think of a first job as a stepping-stone. By taking it, you'll be another step closer to the job you ultimately want.

Begin your job search early. The first stop is the career center on campus. A career adviser can help you fine-tune your resume and polish up your interview skills.

Landing the right job takes a lot of research. So dig in and get going. Join professional organizations. Attend conferences and meetings in your area. Subscribe to publications in your field.

Network until you drop. Sound the alarm and tell everyone you know that you're in the job hunt. Ask them to spread the word.

"A lot of getting a job is networking," says Nancy Dunnan, author of How to Invest $50-$5,000. "If they're looking for a job they should turn to family and friends for ideas."

A neighbor or co-worker of a parent may be able to steer you in the right direction. Contact past members of a fraternity or sorority and other campus organizations. Revisit your old high school. Tap every contact you can think of.

Getting your foot in the door
When you land that all-important interview, know everything there is to know about the company before you step in the door.

"Research the company and the position before you come in for the interview," says Mimi Collins, a spokeswoman for the National Association of Colleges and Employers. "Do your homework. Show your interest."

Consider taking an internship, part-time work or volunteer work in your field. These types of positions are a good way to get your foot in the door. They may lead to a full-time position with the company or organization at a later date. At the very least, the experience you gain and contacts you make will help with your job search.

Dunnan knows of six recent graduates who volunteered with nonprofit agencies in New York City. All six had full-time jobs within six months.

Make the most of your first job out of college -- even if it's not your dream job. Learn as much as you can, but don't get too comfortable. Stay on the lookout for bigger and better opportunities.

"You've got to have a plan to where you want to go next," Gardner says. "People who don't, tend to get stuck there."

First job, first budget
You'll also need a plan for handling your money. Mapping out a budget is a good place to start. Don't worry. It's not going to be as bad as you think.

"It doesn't have to be a budget that drives you crazy," Dunnan says. "But you do need a budget."

At the very least, you need to get a handle on set expenses, such as rent, utilities, car payments and minimum student loan and credit card payments. How much of your monthly take-home pay will these expenses eat up? Is it 75 percent of your money for the month? How much money is left over for food and fun?

After you get a handle on the monthly bills, take a closer look at day-to-day spending. Have you ever wondered how the $40 in your wallet could disappear so fast? Tracking your spending for a few weeks will give you the answer.

"At least for a couple of weeks write down your spending, and decide what you can do without," says Jason Anthony, co-author of Debt-free by 30: Practical Advice for the Young, Broke, & Upwardly Mobile.

"Almost half the battle is knowing where your money is going ... How much money did you spend last month on coffee?"

Do yourself a huge favor: As much as you can, avoid running up credit card debt. Carrying big balances on high-interest rate credit cards can really drain your wallet.

"The high interest rate credit card debt is the thing you really want to chip away at," says Beth Kobliner, author of Get a Financial Life: Personal Finance in Your Twenties and Thirties.

Pay more than the minimum payment on your credit card every month. Even an extra $10 a month can make a difference.

This article from Bankrate.com discusses a number of strategies for paying down card debt, including freezing your minimum payment.

Good debt, bad debt
Always, always pay your bills on time. Establishing a good payment record will help you qualify for a credit card with a lower interest rate. Transferring a balance to a card with a low interest rate can save you a bundle. This Bankrate.com worksheet will walk you through the steps.

You want credit card debt out of your life as soon as possible. Student loan debt is less of a worry.

"I classify that as good debt," Anthony says. "You should attack your credit card debt first because the interest is higher, much, much, much higher."

As long as you can make your monthly student loan payments you're in good shape. Interest rates on student loans are quite low and look to stay that way.

On July 1, the interest rate on federal Stafford loans dropped from 8.19 percent to 5.99 percent, its lowest rate in decades. The rate remains in effect through June 30, 2002. The Stafford program is the largest source of student loan funds in the country.

The U.S. Department of Education sets variable loan rates each year based on the rate for 91-day Treasury bills at the last auction in May. On May 29, the rate for 91-day Treasury bills was 3.69 percent. That rate could be even lower this spring, thanks to several interest rate cuts in mid and late 2001.

So there's a good chance Stafford loan rates will stay below 6 percent from July 1, 2002, to June 30, 2003. That's great news for all student loan borrowers.

Consolidate?
If you're struggling to make your loan payments, you may want to consider signing on for a consolidation loan. A consolidation loan can lower a borrower's monthly loan payments by as much as 40 percent and can also stretch out the repayment period.

A consolidation loan also locks in a single rate for the life of a loan. The rate is based on the interest rates on loans you already have. It's best to consolidate when interest rates are low as they are now.

Information, applications and calculators for consolidation loans are available on the USA Group and Sallie Mae. Borrowers can also contact their lenders with specific questions on consolidation loans.

Grads facing serious financial problems may be able to get their loan payments postponed or deferred. Be sure to contact your lender and ask about deferment and forbearance programs.

Once you map out a realistic but not suffocating budget and get a handle on your credit card and student loan debt, you're ready to take on the real world -- recession and all.

-- Updated: Dec. 23, 2002