Recession touches students too
By MAEGAN SMITH
With a $700 billion bailout plan proposed, the abrupt end of more than a few financial firms and the current credit crunch as indicators, America’s current economic crisis is undeniable. While what this means for Wall Street has been explored ad nauseum, what this implies for college campuses is somewhat less traversed territory.
When the housing market bubble burst, the resulting mess did not stay contained to just that one industry. Its effects rippled throughout the whole of the American economy as seen in the swift downturns of the stock market, current rate of unemployment and general wariness of most businesses to put their necks out financially.
“One of the things that makes this thing [economic crisis] so difficult is that it hit all the sectors,” said Sid Credle, dean of Hampton University’s school of business. “It hit the banks, the real estate market, retail … It went nationwide and now it’s international.”
The effect of the crisis in service industries has touched students. Jobs in food service and retail serve to sustain many while they matriculate through college.
“It has been beyond difficult to find a job,” said Shannon Hayes, a music education major at Hampton University. “I have been looking basically the whole semester, but I’m getting nowhere.”
Hayes had a part-time job at a boutique in Norfolk until it went out of business is September.
Her struggles were shared by Iyanna Fairweather, a biology major at HU.
“It took me forever to find a part-time job,” said Faiweather. “I looked all over, but people just aren’t hiring right now. Everywhere I went, that’s what I heard.”
It is not just in Hampton that students are having difficulty finding employment. Lynella Charles, a film student at Pennsylvania State University in University Park, Pa., lost her job at a local restaurant that was forced to close and has been unable to find a replacement.
“The owner was having difficulty keeping the doors open,” Charles said. There was a noticeable drop in customers from last year to this year.”
While some students depend on part-time jobs to help finance their higher education, most depend on loans. With this recession has come a loss of some of these opportunities. Just as stores cut back on hiring and in some cases are even forced to close their doors, college loans could also be affected by the current market.
“Loan rates are going higher,” Credle said. “There is going to be a great demand for loans and banks aren’t just going to give them to students carte blanche.”
While rates have yet to rise, Credle says if the economy isn’t fixed or on the road to being fixed soon, that will be inevitable.
Meanwhile, as according to the College Board, total borrowing for school has reached an all-time high of $85 billion in the 2007-08 school year, which is more than double what it was just 10 years ago. Federal aid growth, however, has stayed relatively flat in that same time period.
With students loans at an all time high, fears are rising that defaulting on these loans will rise as well.
“The credit crunch could affect student loan default rates as well,” Credle said. “The convergence of the high rates of borrowing and this economic downturn could create a serious issue. It’s definitely something people will have to watch for.”
With borrowing at an all-time high, college student securing good jobs post-graduation would seem paramount. However, prospects for recent college grads aren’t as bright as some would hope.
“Coming into the job market as a recent grad was daunting,” said Ronald Smith, a 2007 college grad. “Then with my field of study [business and market], it was next to impossible to actually find a job.”
Smith, who graduated at the top of North Carolina Central’s business school, could not find a job in business or marketing upon his graduation.
However, according to Credle, the future for students in not as dark as it seems.
“Right now students have a unique opportunity,” Credle said. He explained that though the current crisis is daunting and serious, it does afford the opportunity to get in on the ground floor of the equities market at what he called a, “seriously reduced cost.”
He argues that if students can learn to prioritize and not spend frivolously, than they won’t only survive this crisis, they could come out the other side in better condition.
Credle also pointed out the new opportunities that this crisis could create.
“Federal government employment will open up. They will pick up the bright hard workers to help fix this problem and stimulate economic growth.”
Not only will there be new opportunities in the wake of this crisis, but there are ways that students who find themselves in any of the situations mentioned can help themselves.
“Obviously the first thing to do is budget,” Credle said. “After that, grads who find themselves in situation where they can’t pay loans can contact their lenders and see about deferment and forbearance. As far as continuing to finance an education, federal loans will remain unaffected by this crisis.”
The writer is a junior at Hampton University Scripps Howard School of Journalism and Communications.