A Recession is Coming - But What Does it Mean for Student Loans?
With the coming recession being no joke, students with loans are all thinking the same thing - Will my interest rate stay the same? Will I still be able to make payments? How will the recession affect my loans!? Things are projected to get worse before they get better. But how bad is it and will it really affect student loans?
The simple answer is “No, it won’t affect your loans.” Sorry to get you all worked up. The current downturn in the economy seems unlikely to cause any real trouble for students due to the preventive measures already being put in place.
The construction industry and mortgage companies have suffered (due to a poor housing market), which has led to layoffs in both areas, spurring worry about the U.S. economy as a whole.
Says Todd Easton, an economics professor, in The-Beacon.Net article, Recession Threat Fails to Phase Students. He continues with talk about student loans:
Most of the loans are coming from the federal government, not the states, and the federal government doesn’t cut back on funding like the states.
Although a recession can affect student loan rates and students could find fewer job prospects making it more difficult to find permanent jobs after graduation, they shouldn’t worry this time around. The downturns in the housing and banking industries should not affect current students at all. Likewise, many student loans will probably not be affected either.
Loans from private lenders are not in danger either, as federal regulations are in place, ensuring if students default on their loans, the federal government will reimburse the lenders. Because the loans are insured, private lenders have no reason not to lend money to students.
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