We are wrapping up graduation season; colleges, universities, trade schools and high schools have all churned out freshly minted graduates. Proud families take countless pictures and videos on their cell phones, restaurants are crowded with celebrating groups, and mortarboards are tossed skyward. And then what? What does the future hold for all these graduates? Is bankruptcy affecting their future?
Whatever your graduate is graduating from — secondary, undergraduate, trade school, graduate school — your child already has a great gift: a good education. That is not to be dismissed as a cheap sentiment.
First, education is not cheap. The average cost of an undergraduate degree from a public school in 2020 was $9,400, according to the National Center for Education Statistics (NCES). Student debt is a staggering $1.479 trillion spread across 43.4 million students, says Education Data Initiative.
Second, the return on investment (ROI) of higher education is significant. The Bureau of Labor Statistics (BLS) estimates weekly earnings of a high school graduate at $781 and a college graduate at $1,305. That means a potential 30-year career income difference of $817,440.
So before you rush out to buy your graduate a used car, new car, or laptop, remember that you have already assisted her or him with that gift of a good education.
The Future Portends
Crystal balls have mesmerized us for centuries, ever since Druids thought staring at reflective surfaces gave them glimpses into the future. Crystal balls are as useful as any other useless tool for knowing the unknowable. They — like Tarot cards, palm reading, and scrying mirrors — are powerless to unravel our futures.
Economists try to predict the future, however, using economic data. Forbes reports an economic forecast of a strong 2022 and a sluggish 2023. Looking even further into the future, the BLS sees the COVID-19 pandemic shaping much of your graduate's future finances from 2020 through 2030:
- Slow labor force growth of roughly 0.5 percent a year partly due to an aging population
- A downward trending labor force participation rate, declining from 61.7 percent in 2020 to 60.4 percent in 2030
- Gross domestic product (GDP) growing at 2.3 percent annually, faster than that in recent history
Where does the BLS see employment opportunities? Service-providing, healthcare, and social assistance sectors will all see the strongest growth because of our aging population. Other growth industries, according to the BLS, include:
- Information technology
- Transportation and warehousing
- Educational services
Employment rate decreases over the next eight years are expected in retail sales, self-employment, and federal government work.
Your children seldom listen to your advice. We all know that, but if your high school graduate is contemplating a leap directly into the labor force, another fact you may want to mention is unemployment. High school graduates have an average unemployment rate of 9 percent, according to the BLS; bachelor's degree holders average only 5.5 percent.
Crystal ball gazers anticipate an uptick in personal bankruptcies in the wake of the COVID-19 pandemic. Employees in industries with higher unemployment rates have higher bankruptcy rates. Experts at MoneyGeek say Texas ranked 10th in the nation for personal bankruptcies through February, 2022, with many more cases anticipated in the months ahead. The unemployment rate in Texas in February, 2022 was 4.7 percent against a nationwide average of 3.8 percent.
Your personal financial situation may cast a cloud over your child's graduation. If you are facing personal bankruptcy, you may fee that you cannot afford lavish graduation gifts for your children. But do not feel guilt over that. Remember the gift of education itself has value. You also want to model sensible financial behavior. When income shrinks, expenses must shrink, too.
Personal bankruptcy for a Texas family is not really “personal.” Bankruptcy affects the entire family, so your graduate should be kept in the loop. You do not need to drag your 18-year-old to an initial consultation with a bankruptcy attorney, but you can share the strategy and suggestions your attorney makes. That can help your graduate understand why the whole family has to cut back, pare down, and tighten belts. And as they prepare to enter college in the fall, you may want to advise them to be very cautious in incurring a great deal of student loan and credit card debt to finance their education.
Your financial freedom, and the bright future you want for your children, may be within reach by filing for personal bankruptcy. Sometimes alleviating your credit card debt can help you service your student loan debt and to help launch those new grads in the family. Begin by talking to a Frisco, Texas, bankruptcy lawyer at The Page Law Firm. Schedule a complimentary strategy session by telephoning 214-618-2101 or contacting our offices today.