What the Double-Dip Recession Could Mean for College Students
When the recession takes a small upturn, followed by a major downturn, it’s called a “double-dip” recession. Double-dip recessions are bad news for everyone—from business owners and employees to governments, homeowners, and college students. Recent graduates are often the first to suffer in any economic downturn, since as the least experienced on the job they’re often the first fired and the last hired.
As a current college student, you may not have to worry about that yet—but you will. And in the meantime, the double-dip recession could affect you much sooner than graduation. Here are a few ways you may notice the effects of a double-dip recession while you’re still in school.
Your college tuition will go up
This is no surprise—college tuitions go up every year, at a rate much higher than inflation. However, a double dip recession means that state governments will have to slash even more funding for public colleges—and private college donors won’t be so generous. To make up the shortfall, your college will probably
have to raise your tuition more than usual, which means you
could be in more debt than expected by the time you graduate.
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College isn’t easy—and a double dip recession is likely to make it harder. |
Those funding shortfalls don’t just hit your pocketbook. They also affect your college experience. Colleges facing major funding shortfalls have had to make dramatic cuts in services, activities, and staff. In extreme cases, this may mean that your major won’t be offered next year—or that campus job may not be around for much longer. Pay attention to the news surrounding your school, be aware of how much financial trouble it’s in—and keep alert for any major changes caused by funding issues.
Larger class sizes
Funding cuts often mean that schools need to let professors go. That’s bad news for your educational experience as well. Over the next few semesters, you could find that fewer classes are being offered—meaning your classes are more crowded, it’s harder to get one-on-one time with the professor, and it’s tougher to get into classes you need to graduate.
Fewer grants and scholarships
If you’ve been lucky enough to pay for some of your college tuition through either need-based or merit-based scholarships and grants, prepare for that funding to get a lot harder to come by. Governments are scaling back on the amount of aid they offer, and as they get more financially challenged, companies and private donors are reducing their amounts of aid as well. Chances are that while your current grant or scholarship may be safe, in the next year or two you might have to depend more on loans—regardless of financial need. This means you could be facing more difficult debt prospects when you graduate.
A harder time getting loans
The recession has already caused private lenders to tighten their restrictions on all types of loans—including student loans. Now that banks can no longer sell questionable debt to investors, they need to start caring about whether student borrowers will be able to pay back a loan once they graduate. As companies suffer in a double-dip recession and jobs become more scarce, it’s likely banks will see you as more of a risk—especially if you have a major in a high-risk, low-paying area. This could mean a difficult time getting any loan at all—and worse terms on the loans you do qualify for.
College isn’t easy—and a double dip recession is likely to make it harder. If you do start seeing the effects of a double-dip recession during your school career, it’s likely to come in the form of more expensive tuition, more difficulty getting loans, fewer scholarships, and fewer classes and services. Expect your college experience to worsen while the price tag goes up. Do anything you can to keep your debt burden small—take a campus job, apply for scholarships, or even consider transferring to a more affordable school—and you’re likely to survive the double-dip recession more easily.
Sources
Sources:
CreditLoan.com: Student Loans and the Second Recession
The Chronicle of Higher Education: State Budget Cuts and How They Affect Students
Distance-Education.org: How the Double-Dip Recession May Be Affecging New Graduates
OurBusinessNews.com: How to Prep for a Possible Double-Dip Recession
Huffington Post: Are We Headed for a Double-Dip Recession?
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