Expecting They’ll Graduate Smoothly To A Life Of Financial Independence

It’s a pity every college can’t have Alan Greenspan as its commencement speaker. The graduates could benefit from a lecture about the irrational exuberance with which they regard their own economic prospects. In a poll of college juniors and seniors conducted for Citibank’s Credit-ED financial-education program, 42 percent said they expect to be financially secure within three years after graduation—”that is, able to afford the lifestyle you want, without incurring excessive debt.” This is, of course, a goal that has eluded numerous Americans who graduated decades ago. Along the same lines, 59 percent of those polled expect to have no outstanding credit-card debt when they graduate from college.

Apart from those planning to attend grad school (23 percent of the sample), nearly all the respondents expect to start working soon after they graduate, including 64 percent who think they’ll do so within three months. They seem to take it on faith that the nation’s employers will cooperate with these plans. At least the students aren’t pricing themselves out of the job market. When respondents were asked how much income they expect to have during their first year out of college, their answers averaged out to a suitably modest $29,130. Just 17 percent said they expect to pull in $40,000 or more. Some of the young grads’ income will come from the Bank of Mom & Dad: 49 percent expect to get financial help from their parents, though just 10 percent think it’ll amount to more than $2,000 per year.

It’s not as though the respondents have been paragons of financial responsibility during their student days. Twenty-four percent confessed to having bounced a check; 32 percent said they’ve missed or been late on a credit-card payment; 17 percent have had an unpaid bill turned over to a collection agency. (Surprisingly, women are more guilty than men of all three of these sins.) An ingenious-though-imprudent 5 percent have made a credit-card payment by using another credit card. Saving is not the strong suit of many students: 32 percent disagreed (including 13 percent who did so “strongly”) with the statement, “I always save money to make sure I can afford a big purchase.” When asked what they’ll do in their post-college days with money they have left over after covering their monthly expenses, 22 percent said they’ll “save or invest it for retirement”; 35 percent said they’ll “save it for goals other than retirement.” But a frank 22 percent said they’ll “spend it on entertainment, eating out, clothes, or other things I want,” and an even-franker 14 percent admitted that they “don’t expect to have money left over.”