The Economics of Recession: a Student's Perspective

            Everyone is cutting back. People are losing money in devalued assets, unemployment has hit intolerable levels, and for some reason the cost of living continues to rise. None of these are secrets and everyone and their mother is affected by them. There seems to be a silent minority, however, that people don't generally appear to be too concerned about: the poor college kids.

            I am currently a junior at a prestigious private university, and believe me when I say that it is not inexpensive to attend this institution. Every year tuition rises, housing prices go up, and (not to beat a dead horse or anything) gas is a killer. I have been on financial aid and scholarships since I entered college, but even that assistance just was not enough. Work study, federal grants, institutional grants, none of it could cover all my college expenses. It was then that I was faced with the dreaded option of student loans

            Don't get me wrong, these loans can be great. Let's be honest, if these loans didn't exist then more than half of college students would be unable to attend at all. If you find the right ones, interest rates are relatively reasonable, more often than not you can get locked into a fixed rate, and you don't have to pay any of it back until 6 months to a year after you graduate. Here's the kicker, though: if you don't pay your accrued interest every month starting immediately (in my case, for example, it's more than $300 a month), you will be paying your debt off for a lot longer and will have a lot more to pay in the long run.

            I don't come from wealth. At all. In fact, I would venture to say that I grew up pretty dog-gone poor. Going to a university like the one I attend you meet your fair share of over-privileged rich kids that don't understand the idea of having a summer job or what it's like to wait tables or work retail just to be able to pay your own car payments. I've worked myself to death to get to where I've gotten today, and there have been far too many times when it was all almost taken away from me because I could not make tuition payments. At the beginning of this semester, I couldn't afford to buy my textbooks, so instead I was going to the bookstore every day for the first few weeks just to get my homework done without having to actually buy the books.

            I live in a relatively cheap apartment, but my school is in the middle of a city so really and truly its not THAT cheap. My parents can't afford to pay for my housing so I have to split it with them. They can barely afford to pay for what they help me out with now, so I pay for all my utilities and groceries on my own. I'm too embarrassed to tell my mother and father this because I know they would go without just so that I would be okay, but I can't afford to pay these things on my own and recently bounced a rent check to my landlord. Turns out that's not so cool. Landlords don't like not getting their money. Right now I am in the process of looking for a second job in addition to being a full-time student because my financial obligations are just too much for me to handle.

            Now I can go on for days, sitting on the pity pot, playing “oh, poor me” until the cows come home. The fact of the matter is that I am not an extraordinary case. In fact, most students my age might even count me as one of the lucky ones. The recession is not only destroying students' abilities to pay their tuition, but their physical ability to go to college. Whether it's food, rent, or textbooks, students are overburdened by these responsibilities, and these days fewer and fewer families are able to provide financial assistance to these students to keep them afloat during school.

            And the only option that just about all of these people have? Loans. Debt. The average student will have accumulated over $20,000 in debt upon graduation, while the average starting salary (assuming he/she even gets a job in this job market) is less than $30,000 for a recent grad. The average length of a loan is twenty years. While it doesn't take everyone the full time to pay off their debt, the fact remains that there are still going to be many people in my generation that could be in debt until their mid-40s. Many young people find themselves now at a crossroads, and many are forced to either leave college for an indefinite period of time or just not attend altogether.

            There does seem to be a light at the end of the tunnel, however, as more and more families are starting to get “creative” with their debt situations. One option that is becoming increasingly more popular is for parents of students to take out home equity lines of credit, which have lower interest rates and shorter lifespans. Many graduates have been using these funds to pay off the principal on their student loans (subsequently reducing their monthly interest payments in the process as well), then paying their parents the monthly home equity credit bills. Consolidating loans and refinancing are also effective methods for students to start digging themselves out of debt.

            All in all, the average college student oftentimes finds his or herself in a rather desperate situation. While there are options and ways that students can tend to their living and academic needs, the fact of the matter is that the task of paying for college is incredibly daunting. Out of desperation, many individuals and families have fallen victim to the predatory practices of many banks and student loan agencies that make grand promises using a lot of smoke and mirrors, but have some pretty deceptive fine print. Our society should be fostering the growth of its young scholars, not burying them in debt. We are the future, but if the system continues to marginalize those students with great potential but lacking the necessary financial strength, then this country is in a rude awakening for what kind of doctors, politicians, and leaders appear in this next generation.