With that danged writers’ strike still going on, there was nothing to watch Monday night. Nothing, that is, except for Bush’s final State of the Union address, which clocked in at slightly more exciting than Clash of the Choirs. Amid the same old talk about spreading freedom abroad and changing energy policy, there was discussion of the nation’s economic crisis and Bush’s economic stimulus package, which could have far-reaching consequences for students.
The stimulus package, which the House passed on Tuesday, is designed to help the economy. An economy which, depending on whom you ask, is either in a recession, about to enter a recession, or completely and utterly in the dumps. The price of oil has risen to unbelievable highs, driving up energy prices. A subprime mortgage crisis threatens both homeowners and banks, making this the rare situation where both of them are on the same side of a money-related battle. Stocks are moving as rationally as Britney Spears. Some banks have even raised their ATM fees as a tiny push to break even.
However, the economic crunch hits students’ pocketbooks directly through student loans. Sallie Mae, the nation’s largest student lender, is feeling the heat and will no longer give private education loans to high credit-risk buyers. Students facing soaring costs and stagnant federal loans have used private loans as a crutch; those loans made up 24 percent of total student loans in 2006-07. The cutbacks only affect subprime loans, which have seen higher default rates and less ability to generate capital during the crisis.
While this loan tightening may not affect most students directly, its effects will no doubt be felt through stricter management of payments and potentially changing interest rates (because it didn’t seem possible for student loans to weigh on us more after we graduate). On the bright side, though, many student lenders have dropped their interest rates in step with the Fed slashing its own rates. Students with variable interest rates will likely benefit.
No crisis is complete without the specter of unemployment, and this one is no exception. Jobs have been lost across the nation and world, from cushy lending gigs to home construction to breast production. It’s the lending job cuts that should worry Northwestern students about to graduate: If even the economic sector is cutting jobs, there won’t be many entry-level positions available with companies looking to trim their budget.
Of course, all this talk of economic crisis is rapidly becoming moot as the economic stimulus package moves through Congress. This package follows the age-old theory that putting more money in consumers’ hands will encourage them to spend, revitalizing the economy while they’re at it. Yes, it should sound familiar. The crux of the plan is tax rebates that will go to 116 million families, offering anywhere from $300 to more than $1,200. Families will also get $300 per child. The plan also contains measures to stimulate the housing market and provides business incentives.
The package follows a debate over what methods will best cure the economy. Democrats wanted to extend unemployment benefits and boost food stamp programs, while Republicans wanted tax breaks for businesses. Republicans also wanted to extend Bush’s tax cuts, a move Bush lobbied for during the State of the Union, though this is sure to stir up intense debate.
If all goes according to plan, the first rebate checks will be in the mail in May, so any students eligible for the rebate can spend it by Dillo Day (hey, I’m sure even the alcohol industry could use a boost). At the very least, families will have an influx of cash just in time for a summer spending spree.