From Gilded Age to Economic Recession: What This Means for Parents and Students
A good job is hard to find nowadays. In today’s economic times, more companies are freezing hiring and many are actively laying workers off. According to the Bureau of Labor Statistics, the unemployment rate has risen by 2.2 million in the past year. And among the companies that are hiring, starting salaries and ongoing pay are lower. Businesses are tightening their belts by cutting back on hours, withholding bonuses, and scaling back raises. In a recession, the pinch is often first felt in employees’ paychecks.
This makes it tough for students, who commonly leave college with tens of thousands of dollars in debt. They often get a grace period of six months or so before they have to start paying off student loans. To many students, it seems like plenty of time to find a job—but in this uncertain economy, it can take much longer for students to find jobs that will pay them enough to meet those monthly bills with enough left over to live independently. While it’s often possible to extend the grace period for federal loans, private lenders can be less accommodating.
In these economic conditions, it’s likely that more students will move back home with their parents in the first year after college, and more parents will support their children with help on student loan payments.
See Also: Online Degree Programs
Wall Street might be struggling but that doesn't mean its time for students to panic. Opportunities still abound for those that seek them.
Short-term health insurance can be found, but it’s usually only intended as a stopgap until students can land a job with coverage. In the current economy, this is taking longer than expected for many students—and parents may find themselves helping recent graduates pay for health insurance in addition to student loans. A more thorough discussion of this issue can be found in this article on health insurance for students and recent graduates.
Recent graduates and undergraduate college students entering classes are finding credit conditions to be less hospitable than in recent years as well. For students entering college, it’s becoming more difficult to secure educational loans. Over a dozen lenders have ceased offering educational loans altogether, and lenders that still offer student loans are tightening their restrictions. If you can get a loan, it will be more expensive—even Federally backed loans are coming loaded with higher fees and interest rates than in the past.
For students getting out of college, it can be tougher to secure a loan as well. Many students graduate without an established credit record and large amounts of student loan debt—not exactly a lender’s idea of the perfect borrower. This can make it tough for recent grads to get loans for necessities, such as a car to commute to work with.
There’s another consequence to tough economic times, as well: students who want to continue their education after college will find graduate programs to be more competitive. When employers aren’t hiring, more of the best and brightest recent college grads consider graduate and professional schools instead of entering the workforce. Competition rises for Master’s and Ph.D programs, law and medical schools—and these schools often raise their expectations for GPA requirements as well.
If you’re about to enter college, it’s never been more important to avoid high student loan debt—especially from private lenders. Try to secure as much free money as possible, and give serious thought to community and in-state colleges with lower tuition. If you’re currently in college, start thinking about reducing your debt before you graduate. And if you’ve just graduated, be willing to broaden your requirements for your first job—you may have to settle for something less than ideal while you wait for conditions to improve.
To learn more about how to secure money for college in this unsure financial time read our article on 9 ways to earn free or borrowed money for college.
TheChapparal.com: What the Recession Means for Students
MTV.com: Surviving a Recession: What Soon-To-Be College Grads Need to Know
Minnesota Public Radio: Private College Loans May Spell Trouble for Students
EurekaAlert.com: Recession’s Silver Lining? More Students Head to Graduate Schools
KTKA: Recession: It Starts With Your Paycheck And Snowballs to Others’
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