[Congressional Record Volume 149, Number 116 (Thursday, July 31, 2003)]
[Senate]
[Page S10609]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page S10609]]
                         ADDITIONAL STATEMENTS

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           THE PERILS FACING OUR GRADUATING COLLEGE STUDENTS

 Mr. AKAKA. Mr. President, the national unemployment rate hit a 
9-year high of 6.4 percent in June. We have lost more than 3.1 million 
private sector jobs since 2001, which is adversely impacting many of 
our recent college graduates who are finding it difficult to secure 
employment in a market that is not producing enough jobs. The Bureau of 
Labor Statistics has released findings that show for this same period 
that the unemployment rate for 20 to 24 year olds has risen from 7.2 
percent to 10.7 percent.
  The National Association of Colleges and Employers, which is a 
nonprofit association that provides resources to help career services 
and recruitment professionals, conducted a survey this past spring that 
found ``corporate hiring has fallen by 36 percent since 2001; 42 
percent of employers say they are cutting the number of college 
graduates they hire; and nearly 71 percent of Government/nonprofit 
employers say they expect to hire fewer new college graduates this 
year.'' This information is very troubling to me because the state of 
our economy has restricted unemployment opportunities and exacerbated 
personal debt for young men and women graduating from college.
  As our college graduates look to their future, many of them will 
already have accrued an excessive amount of debt ranging from student 
loans to credit cards. I have been working to shed light on this 
problem which is only getting worse, the problem of economic and 
personal financial illiteracy among our youth.
  Accumulation of credit card debt by college students has become an 
issue nationwide. Credit cards are easy to get; many students are able 
to obtain a credit card by simply submitting a copy of their school 
identification card. They are acquiring and using credit cards at a 
greater rate than ever before, without completely understanding the 
credit system and accrued interest. Many of these students are not 
adequately educated about using and paying off a credit card. Rather, 
many are being enticed by gimmicks to apply for a credit car. A quick 
Internet search can reveal dozens of sites that provide myriad of 
opportunities for students to obtain a credit card. Some of these sites 
offer credit card limits of up to $5,000. Others suggest that one could 
use the card to purchase books, pizza and tuition, and also earn bonus 
points for free music CDs. Other inducements are offered, such as a 
free movie ticket for those who have good credit.
  With college students finding it harder to seek gainful employment 
upon graduating, one would hope that they would at least have a greater 
understanding of how to best manage their personal finances. It would 
have been beneficial for these graduates to have learned the essentials 
of money management and personal finance before leaving college, and 
even before leaving high school. However, we still have much to do in 
this area.
  Accordining to the 2002 National Jump$tart Survey, economic and 
financial literacy scores have declined since the Jump$tart Coalition 
for Personal Financial Literacy conducted its first survey of seniors 
in high school back in 1997. Of the high seniors who took the survey, 
68.1 percent them failed, demonstrating a clear lack of understanding 
of the basic fundamentals of economics and personal financial 
management.
  We have also seen an increase in personal bankruptcy filings and, if 
one were to couple that with the lack of jobs available for graduating 
students, we see that many of our students are well on the road to 
financial crisis, if they are not already there. Although the 
Department of Education has found that the default rate on student 
loans has decreased substantially, it has found the dollars in default 
remain high. This means that students defaulting on their loans have a 
larger debt load, which may cause them to file for bankruptcy before 
they even begin a career.
  In the 2002-2003 fiscal year, American lenders made about $31 billion 
in consolidated student loans, averaging about $27,000 each. 
Furthermore, 45 percent of college students are in credit card debt, 
with the average debt being $3,066. Our students are accruing large 
amounts of debt without a clear understanding of how to manage their 
finances. As unemployment continues to rise and the job market remains 
bleak, we must empower our students with a greater understanding of 
economic and personal finance. Although improved financial literacy is 
not the complete solution to their problems, it can help them to 
alleviate or prevent some of the financial difficulties they may 
encounter.
  As we continue to work towards economic recovery and job creation, it 
is imperative to also educate our children so that they may understand 
and excel in economic and personal finance.

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