CreateMyLoan

The current crunch in the student loan market may have a longterm positive effect on the economy. As the private loan market continues to tighten up its credit requirements for students looking to get loans for next semester, fewer students will be able to afford them (usnews.com).

Although for current students this will be a tough transition, and may force some to work while going to school part time, for students just about to attend a college or university, they may think twice about the money they spend. They may start out only part time while working. They may decide that the “name” on the school isn’t as important.

I am not claiming that there are not different levels of education; there are! However, for certain degrees and careers the only important name on the diploma may be the students. With the expansion of online degree programs, it is less important for one to move to another city, endure the cost of additional rent, moving and other expenses, just to get an education. It will also force students to look further into grants, scholarships, and other means to pay for their schooling. It may help drive down the dizzying $20,000 per student loan debt that is the average for graduates. In turn, they will be able to pay off debt quicker, and move toward a healthier economic outlook.

Also, businesses may be encouraged to help out with either scholarships, contributing to tuition, tuition reimbursement or other like programs. If businesses continue to require degrees for certain positions, then they might move toward what is happening with the health industry. Nurses and other professionals in the health industry are getting signing bonuses, college loan debt paid, and other incentives because of the need in that industry.

In short, this student loan crunch, along with the loan crunch in the housing industry may produce a long term positive effect for the American economy.