Amid the latest financial woes, students are concerned about how the turmoil on Wall Street will affect their ability to secure student loans and jobs after the smoke clears and chaos subsides.
Benjamin Keen, economics professor, said the job market will be particularly volatile in the coming years, especially for college students who are entering the job market for the first time.
“In good economic times, you’re usually just competing for entry level jobs with other college students,” he said. “When economic times take a downturn, you’re often competing with people who have experience.”
Despite the difficulty students may have nailing down a job, Keen said the banks and economies of Oklahoma and Texas are relatively stable compared to those in other areas of the country. He attributes the strength to the presence of energy companies and the lack of a price appreciation buildup in housing.
“The financial instruments which are causing some of the problems are less prevalent here; our banks have dealt less with them,” Keen said.
That doesn’t mean OU students won’t be affected by the economic turmoil. Many lenders, including Bank of America and the College Loan Corporation, have stopped issuing private loans, making student loans more difficult to obtain than they have been in the past, according to financial aid organizations.
Although money may be difficult to extract frm banks in the form of loans in the near future, Keen said money already in banks is secure for most people.
“There is FDIC insurance for the first $100,000,” he said. “This is not a big problem for households, but businesses do get above that amount.”
The Senate’s version of the federal bailout bill would increase the Federal Deposit Insurance Corporation’s insurance limit to $250,000.
Catherine Mooney, conomics professor, said that raising the FDIC limit is a step in the right direction.
“They haven’t adjusted that $100,000 limit for inflation in years, so it makes a lot of sense,” she said.
Mooney also said that it’s not going to be as easy for students to buy houses after they graduate. She said lenders are skittish about handing out loans to people with shaky credit.
“You’re not going to be able to buy a house with a terrible credit score anymore,” she said. “Protecting your credit is always great advice, but it’s obviously a lot more important now.”
Keen echoed Mooney’s assertion that maintaining good credit is a vital aspect in creating a positive and stable financial future.
“Great credit is a necessity,” Keen said. “College students need to do things in college to build their credit. That includes paying their bills on time and paying their rent on time. You have to demonstrate that you can handle credit.”
Keen said the main thing students can do to help ride the current economic struggle is to work to enhance their credit score. Otherwise, he said, getting a loan of any kind will not be likely.
“Credit scores are critically important and high credit scores are required,” he said. “I don’t know whether anyone will accept less.”
