The Financial Crisis and How It Affects Us

Since early August, the United States has seen its economy crumble into a near recession. As the effects of the financial crisis grow, taxpayers around the world are searching their pockets for money to clean up this mess. So, exactly what caused this mess?

Well, basically, due to numerous mortgage failures, banks and other financial institutions are afraid of making loans during this time period. “When home prices were soaring in recent years, just about any person or business could get a loan; if they had bad credit, they just paid a higher interest rate. More and more loans to more and more people helped send home values to unsustainable highs. This is known as a bubble, which is financially painful when it pops” (Washington Post). Unfortunately that bubble popped when the housing market collapsed. Due to the housing market failure, the banks are now sustaining from giving out loans to anybody ranging from homeowners to college students like you and me.

This has a spiraling effect because less and less people are buying homes, cars, and etc due to lack of money; therefore companies are laying off workers in order to save money for their business. Then those workers who are laid off have less money to spend, affecting other businesses and the problem keeps getting worse. “If there are few loans and little spending, the country could fall into a deep recession – if it's not already in one” (Washington Post).

So how does this affect us? Of course this dilemma influences the amount of loans us college students receive. Even though it’s bad enough already, the checks will be getting smaller. However, if you are a college student in need of money, there are other ways that you can receive that. Well of course scholarships would be the number one way to gain access to free money. If you haven’t heard of Fastweb.com please visit that site ASAP. Also, as of now Federal loans are a students’ best bet to receive money, since banks aren’t giving out private loans.