Chances are, you’ll be going into debt to pay for it. And we don’t just mean morally. As a new graduate, you may find that your college debt affects the type of jobs you can get, the type of companies you can work for, and how quickly you’re able to find a full-time job to start paying off that debt in the first place. And if you’re a recruiter or employer looking to hire entry-level employees, it would do you well to remember that just as your salary is likely to matter most when you’re first starting, the financial situations of new graduates can influence their decisions as to where they apply to work.
Recruiters can benefit from understanding the financial realities facing new graduates. Early-career employees are looking for employers that offer not only competitive salaries but also jobs that are stable and secure with good benefits and the flexibility to allow them to achieve a work-life balance. They are particularly interested in employers that can offer them opportunities for growth and development and that have good earning potential in the long term.
Financial Pressure Starts Before Graduation
The financial decisions that you make as a student while you are in college can affect your post-graduation job search and/or career choices. Most students start by trying to secure as much financial aid, grants, and/or college scholarships as possible. Next, many students try to get as much work-study as possible to work and pay for college. Additionally, many students take advantage of federal student loans and/or alternative (private) student loans to cover college expenses not already covered by other types of financial aid. To assist students in making an educated decision regarding financial aid for college, many types of financial aid have different interest rates, fees, and terms than others, so a student should make every attempt to research and compare all of the financial aid options to get the greatest amount of financial aid for the lowest total cost of the financial aid, as well as to get the lowest total amount of financial aid needed to cover the total amount of expenses needed to attend the college or university that the student has chosen.
For students who have used all available scholarships, grants, savings, and federal aid but still face a funding gap, a private student loan may help cover some of the remaining education costs. Before borrowing, students should compare interest rates, fees, repayment terms, and the total amount they may repay over time. It is also important to consider whether the monthly payments will be manageable after graduation, especially for those who may already be carrying debt from earlier years of study.
Student loans can also affect students' decisions before graduation. For example, a student may take an unpaid internship because the experience will pay off in the end, but a student with loans may choose a stipend-paying internship instead. He or she may even rule out some industries or locations where the starting salary and benefits are insufficient to cover the required loan payments and other expenses, in addition to living expenses. For example, they might choose not to take a job in New York City because the cost of living there would leave them with little to no money to pay off their loans after covering their expenses.
Salary Expectations May Be More Practical
Student debt can make salary a more immediate concern for graduates. While many candidates care about meaningful work and career development, they may also need enough income to cover rent, transportation, loan payments, and other essential expenses.
This does not have to mean that candidates expect to start on extremely high salaries, however. It is sufficient for employers to set out clear information about a graduate’s salary in relation to that of others in the same position. Even when an employer does not pay its graduate employees very high salaries, it can demonstrate the value of employing them by explaining how salaries are expected to rise over time.
This same rule holds for the transparency of compensation and benefits offered by different employers to allow new grad employees to make more educated decisions on which jobs will be best for them. It may be that a new grad would prefer to start at a lower salary to take advantage of other benefits, such as fully paid training, flexible work arrangements, or opportunities for promotion within the company.
Location and Relocation Decisions Can Be Affected
Students, recent graduates, and individuals pursuing further education are facing numerous challenges as they attempt to make ends meet while navigating various life and career stages. Student loans and other financial obligations can cause several problems for graduates considering career opportunities. As students near graduation, they must begin to evaluate various job opportunities in different geographic locations. While some graduates may have sufficient financial resources to relocate for a new job, many recent graduates will be unable to afford the costs associated with relocating to a new city or location. These costs can include a one-time apartment deposit, travel to and from the new location, new furniture, and temporary housing until the graduate can find and move into a more suitable location.
However, some employers offer relocation assistance, which can ease some of the burden of moving for a new job. Also, jobs that allow flexible start dates and work arrangements, such as remote or hybrid work, can make a job more accessible to graduates from all over the country. Even offering a few months of free housing or other forms of temporary assistance to new employees can make a big difference in the hiring process.
Benefits Can Strengthen an Entry-Level Offer
Health insurance is as important to new college graduates with financial burdens to pay as salary. Graduates also look for contributions by their employer to a 401(k) plan, in addition to programs for financial education, for professional development, and for assistance with student loans, to name a few. They just need to be explained. The value of employer-paid training and a 401(k) match can initially go unnoticed.
Job training is just as valuable to a student as the financial value that a company’s retirement matching funds could have to a recently graduated employee. Explaining the value of an employer’s financial education programs, for instance, to the recently graduated could entice them to consider hiring with your company over that of a competing company.
What Employers Should Keep in Mind
Recognizing that a graduate’s decision to take a job is influenced by many factors related to student debt, even if the debt was incurred before their time with your company, can assist you in recruiting and keeping entry-level employees. These employees are paying close attention to salary as well as to other benefits and realities of employment that have a practical value to them. In other words, employees are looking for real employment that has tangible value for them.
Understanding the financial realities of recent college graduates can be key for recruiters and employers to create an effective hiring process and craft job offers that best meet the needs of candidates for entry-level positions.
