Students have felt the impact of the current economic state in their own lives — high inflation affects students just as it does the rest of the American public. In fact, students are often hit harder.
Students of color, first-generation students and socioeconomically-disadvantaged students have felt economic disparities more severely than the rest.
The U.S. has had a declining gross domestic product for two straight quarters. According to the U.S Bureau of Economic Analysis, the country's GDP in quarter one of 2022 decreased at an annual rate of 1.6 percent, with GDP in quarter two decreasing at an annual rate of 0.6 percent. A six-month (or two-quarter) contraction period is the informal definition of a recession.
Informally, America is currently in a recession.
High inflation is raising the costs of students’ necessities, such as housing, food and transportation. Additionally, this extended inflation has the potential to drive up the cost of tuition.
This leads to a chain reaction of financial pressures. With higher tuition costs, students will have to borrow more money. And the interest rates on student loans will be higher because of the federal rate hikes on loans.
The student loan interest rate for the 2022-2023 year has already risen to 4.99 percent, up from the 3.73 percent that it was last year.
Tuition costs and inflation rates increase while grant budgets and financial aid awards do not, resembling the current conversation surrounding prices going up and wages remaining the same.
The advice offered to students is the same advice they’ve heard for years: “learn how to stretch a dollar, spend a little less, make a little more and make sure to have a budget.” While this advice is helpful, the current economy and outrageous cost of higher education have caused these efforts to go in vain.
All this said, the only way to get through higher education for most people these days is by borrowing money.
In addition, people have forgotten what being a student entails. Students feel the pressure of scheduling their academic and social lives, dealing with the stress of meeting deadlines and fitting in with their peers, all while learning how to balance a student-work life. The added burden of financial stress and payment deadlines poses even more of a challenge.
Higher education is a key pathway for social mobility in the U.S., but it can be hard to achieve with so many barriers for people of color, first-generation students and students from low-income families.
In addition to the burdens of economic inequality, students of certain racial, gender, and ethnic demographics will face more challenges than some of their peers, especially in the wake of an economic recession.
Hispanic and Black Americans have been affected more severely by higher inflation rates than others. Hispanic Americans have experienced inflation 0.6 percent more than average and Black Americans have experienced inflation 0.2 percent more than average, according to the New York Federal Reserve, which admits these numbers likely underestimate the actual economic gaps.
First-generation college students more often come from low-income backgrounds and may not receive the same financial support as other students. In fact, first-generation students are less likely to graduate compared to their non-first-generation counterparts who have an equal parental income.
On top of the economic inequality already so prevalent in America, there is now the added phenomenon of inflation inequality. This simply means those with lower incomes may face prices that rise more quickly.
As explained by the Center for Law and Social Policy, firms create new products with lower inflation rates that cater to socioeconomically-advantaged consumers. Higher inflation rates hit lower-income households harder, as rates on generic and low-cost goods disproportionately rise.
Simply put, higher inflation rates are put on essential everyday products.
This disadvantage keeps low-income households from economically advancing. So people who are doing all the right things to socioeconomically climb — including going to college and saving money in every way possible — still face immovable barriers that keep them from achieving the life they desire.
We need change. These social and economic norms are unacceptable. Students shouldn't face as many financial barriers to advancing their socioeconomic status, especially in a country that claims to facilitate climbing the socioeconomic ladder.
The social and economic “norms” need to become a lot less normal.
To get the day's news and headlines in your inbox each morning, sign up for our email newsletters.