Credit cards can be dangerous for college students. Photo courtesy of Google.

What the Recession Means to College Students

By: Anna Altheide

Posted: 4/7/08

More and more analysts are agreeing: the economy is coming close to another recession, if it isn't already in one. For millions of college students taking out loans or shifting into the work place, this could be a setback.

A recession can affect nearly all markets, lowering the worth of the dollar and dropping interest rates. Recessions in the past, such as the 1981 recession, have lasted up to 16 months and dropped interest rates by six percent.

Nadira Hira, a writer for Fortune Magazine, has suggested that some students may have to weather the storm by living with their parents. In an interview with MTV Hira said, "There is an obvious stigma with living with mom and dad, but if it takes six months to find the best job possible, it's worth it in the long run."

Jenny Mandeville, 23, a recent graduate from New York University with a degree in communications, told The Chaparral, "I'm lucky because I live at home with my parents and I have a good job, but I would be scared to death if I didn't have stable employment right now." Mandeville now lives in her hometown of Nashville, Tennessee, and works as a freelance concert photographer.

Most college students do not start building their credit score until they leave the nest. In this latest recession however, too many consumers, including college students, began borrowing on their homes, putting the banks in jeopardy. Hira said, "It's a lot more important now that you're credit-worthy, and your credit score stays high."

Hira added, "It's going to be a lot harder for them [young people] to get credit. You had a lot of young people who had no credit history and really no financial skills to speak of getting all kinds of credit cards and insane housing loans, and really taking on a lot of debt."

Student loans are a common source of debt for young people.

Tim Dryer of Souther New Hampshire University insists that private loan companies are not going to dry up any time soon, let alone federal reserves. However, he suggests that students should still borrow less as they may pay for it in high interest. Students are still encouraged to file their Federal Student Aid FAFSA report at www.fafsa.ed.gov for federal aid in paying for college.

Columbia University professor Christopher Mayer is quick to note that, in the grand scheme of things, young people are going to be working for 40 years. Mayer encourages students, in the meantime, to explore new things, try something different, and see how they like it. Waiting may be the only option, for now.