Credit crisis affecting students

A lot of attention has been focused on how the current shape of the economy is affecting families and small business owners. However, the economic crisis is impacting college students as well.

Because of the mortgage meltdown, banks, and more recently, credit card companies, have realized they were extending credit too freely.

Economics professor Raford D. Boddy said students will no longer be offered credit as they have been in the past.

“Because of the financial crisis, the banks plan to restrict credit across the board,” Boddy said. “Student loans will be harder to get. Credit card issuers are already tightening standards. The days when they threw cards at you have passed.”


Students will not only find it difficult to acquire credit, but will face new troubles with the credit cards they already have.

Boddy said because credit card interest rates are already high, they might not increase that much. However, companies will find other ways, such as raising late fees, to profit. He added some might even have “outright recalls.”

“Credit cards are not ‘plastic money.” Boddy said. “They are extremely expensive, unsecured loans.”

Students are already feeling the pressures of the downward spiraling economy.
Political science junior Elie Saad said there needs to be a solution to our country’s economic problems now.

“I just got off the phone with my bank to apply for a new loan and came to the conclusion that I can’t even afford to borrow money,” Saad said. “Increasing interest rates on my credit card, student loans and a vehicle loan have led to financial struggles the past few months.”

While some students might find it difficult to take out a new loan or open up a credit card, other students are having trouble because of the debt they have already acquired.

Political science and international business junior Alejandro Renteria said he has several friends who are seriously in debt.
“They tell me that their credit card debts amount to $6,000 to $8,000 in addition to their school loans,” Renteria said.

Renteria added because of the economic crisis, many of his friends have also lost their jobs because of personnel cutbacks. Now out of work, they will not be able to make the required payments on their loans and credit cards.

Boddy said the economy will also contribute to fewer job prospects for graduates and advised students to try to keep the jobs they already have. Adding to that, he emphasized that, although the country is in the midst of an economic crisis, it is still very important for students to continue to try to manage their finances and pay off their debt.

Suggesting students pay their credit card bills in full each month if possible, Boddy said that doing so will help students build good credit, and thus invest in their future.

“Most students are not in a position to save very much, so at least try to break even,” he said. “Don’t dig a deeper hole.”

Comments

1 comments

Marissa Edwards, Viking Vanguard reporter

Mon Dec 1 2008 23:41

I like the picture. I'm writing a story on the same topic for my high school newspaper.
How did you get all the cards?

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