Worsening Economy Hits Students

Higher costs, tough job market make students cautious.

November 7, 2008, 2:42 PM

Nov. 11, 2008 -- Johnathan Dixon, a senior at New Jersey Institute of Technology, can't help but laugh at the irony of his chosen major--finance--and his current predicament.

Once an aspiring investment banker, Dixon has had to rethink his career plans, and for the first time in his college career, Dixon had to accept an on-campus job. He works at NJIT's accounts payable department making $8.50 an hour.

"I took the job essentially out of desperation, I needed the money," said Dixon.

Last year Dixon's father was laid off from his job, causing Dixon to take on more financial responsibilities.

"There's only one stream of income, which only allows [my parents] to barely cover the bills," he said. "I used to get money, like maybe $50 a month, but I had to get a job, start paying my own phone bill, gas."

As Americans struggle to make ends meet during this economic crisis, students have not been shielded from the turmoil. Whether they are rethinking their post-grad plans, or taking on more responsibility to help out at home, students have had to smarten up and make some major adjustments.

According to Dixon, students at a commuter school like NJIT have had to cut back on their driving. "If you don't rely on a job, gas going from 30 dollars to fill your tank to 65 dollars to fill your tank is a big deal," said Dixon. These days Dixon relies on public transportation.

"If anything more generally people are driving less, absolutely driving less. I used to go home every weekend; I've been home probably twice all year," said Dixon, who lives roughly an hour from campus.

But boarding the bus isn't the only change Dixon sees from his peers. "Another thing I'm realizing is kids are stealing a lot more, like food," he said, "because you got to eat."

As much as Dixon laments having to change much of his spending behavior, his sympathy goes out to his father and those like him who are out of work when they need money most.

"When you're an adult and you're at that stage nearing retirement, it's kind of disheartening. That kind of pays a toll emotionally. It's just real stressful." He adds, "More so now than ever I feel like I'm going to try to get a job to help out at home. Not even help out at home but fully emancipate myself, and take all my financial burdens off of them."

Cheyenne Autry, a sophomore at North Carolina State University, penned an article for the university newspaper about students and the economic crisis.

Unlike at NJIT, NCSU students are used to taking advantage of buses that even take them to and from off-campus locations. But Autry notices students are cutting back in other ways.

"A lot of students are trying to cut back in any way they can. Not going out to eat as much, staying at home more and doing things in groups of friends. A lot of them said they were trying to cut back on food, shopping. They're trying to pay for more important things like rent and bills."

Shopping has been an especially tough habit to get rid of for Autry. "I do try to keep track of my money better, unfortunately I haven't been shopping in a while," she says.

Not everyone is being so frugal, says Autry of students who haven't changed their spending habits at all.

"They knew that the crisis was going on and they knew that there were issues and that they should be saving their money better but they just weren't. Some students just like to spend money," she says.

Dixon noticed a similar situation on his campus, where students are feeling the financial stress to varying degrees. "I know kids on campus who come from a little bit of money, so it doesn't affect them at all. I know one girl who had to quit school and just work. It definitely affects people but it varies."

In response to the compromised financial markets, Dixon, a finance major, has decided to go on to graduate school. The crisis "has had a major effect on my career path. I was planning on being an investment banker but that is no longer the case." Now Dixon plans to prolong his education until the markets improve.

According to Connel Fullenkamp, an economics professor at Duke University, the crisis directly affects students planning to enter the job market in the financial sector.

The large financial service companies "have all largely cut back their hiring dramatically," said Fullenkamp.

However, Fullenkamp says this has provided an opportunity for some smaller firms to recruit high-caliber students, saying, "they are actually becoming aggressive recruiters right now."

Fullenkamp advises that students smarten up and respond accordingly, no matter what their major.

"For most students they need to understand what's going on in the job market and prepare themselves. They have to go and locate the opportunities themselves. For students who are earlier in their studies, they need to pay some attention to the likely economic consequences. They need to pay attention to their own marketability."

Autrey says the stress on upperclassmen students is palpable, but younger students remain optimistic. "A lot of the upperclassmen students who are getting ready to graduate are getting antsy about what can lay ahead. As far as freshman and sophomores go, graduation is not really a major thing on our minds yet, we're just still enjoying college."

For college's future financiers, Dr. Lori Leachman, economics professor at Duke University suggests, that students "consider fields beyond investment banking."

Regardless of one's career path, affording tuition is increasingly a concern on many parents' and students' minds.

"Credit markets are really tight, property markets are down, so if parents were thinking about borrowing against the value of their house they may not be able to do that," said Fullenkamp. "For some students this is even going to affect their ability to go to school or stay in school."

When asked if colleges will likely enhance their financial aid programs, Fullenkamp wasn't very optimistic. "College endowments are suffering along with the rest of the financial markets. It's hard to imagine where extra money will come from in terms of this financial aid squeeze. The parents are squeezed, the students are squeezed, and institutions don't have the income and the capital gain on their endowments. There really isn't any place to get it."

While parents remain the visible victims of the economic crisis, Dr. Lori Leachman believes the next generation will certainly have their hands full. "The current crisis will add significantly to the debt, this will be a major issue for the next generation to deal with." She adds, "Implicit in this is some resolution with respect to Social Security and Medicare and Medicaid."

To prepare for more long-term ramifications, Leachman advises that students "learn some [economics] so they can make more informed choices with respect to the policies proposed, and they must begin to save."

A Few Helpful Coping Mechanisms

1. Take Advantage of Free Food-- Throughout the week a student group is always holding an event somewhere on campus, and if they are meeting around dinner time, there will be guaranteed free food. Find out what group is meeting and where, show up, try to blend in, and enjoy a free meal!

2. Psych Experiments-- You've seen signs all over campus advertising odd psychology experiments, now's the time to get involved. You can usually get 5 or 10 bucks for an hour worth of your time, or filling out measly survey. 3. Get on the Bus! The days of being a limo service to your friends are long gone. Learn the public transportation system around your campus and hop on the bus, train, metro, whatever it may be. This is a great way to save on gas money.

4. Skype-- If your cell phone bill is through the roof hang up and get on Skype. You and your friends can download the software and make calls over the Internet for free.

5. Head to the Career Center-- Don't just think short term savings; get prepared for an unaccommodating job market. Securing a job is going to require major networking, so get a leg up, and look to your career center to see how you can make yourself more marketable.

6. Stay Informed-- Try to remain in tune with what is happening financially and politically so you'll be armed with the necessary information to endure this crisis relatively unscathed.

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