Although the stock market's recent downward spiral and news of a pending economic slowdown may have far-reaching implications in some areas, national education officials expect effects to be moderate in financial aid for higher education.
University officials do not expect the economic conditions to have great negative long-term consequences on financial aid for higher education. The strong economy four years ago was outside the historical pattern, Education School Dean David Breneman said.
Financial aid officials at the University said they are not especially concerned either.
There will "always be variances. That's what financial aid is all about," Student Financial Services Director Yvonne Hubbard said.
In the last three years, officials have tracked a trend that shows a declining number of students receiving need-based financial aid. Hubbard said she thinks this trend has stabilized.
About 25 percent of undergraduate University students now receive need-based aid.
Officials do not expect the economy to have large effects on the number of financial aid requests the University receives.
"We think [the percentage of students on need-based aid] will gently start nudging its way up," Hubbard said.
She said the percentage of undergraduates on need-based aid might increase slightly, but she does not expect to see the amount of students on aid to increase to anything like 33 percent, as it was during the recession in the early 1990s.
The plunging stock market also is expected to impact the financial status of families of future college students, although its impact on them may be moderate as well.
In the years prior to sending children to college, many families take their money out of the stock market and invest it in more "conservative savings vehicles" such as CDs and bonds, said Richard Flaherty. Flaherty is president of College Parents of America, a national association that helps parents prepare for their children's college years.
Investment in more conservative funds is what "astute savers who utilize the stock market would do," Flaherty said.
However, he said more families may have decided to risk putting their money in the stock market because of its success in recent years. Among those with money in the market, there are a "number of parents exhibiting anxiety," he said.
He added that there are a number of alternatives for concerned parents, including taking out loans to pay for college.
I "anticipate loan rates will continue to decline while the stock market is going down," Flaherty said.
For families with younger children, he also said state tuition guarantee programs are a good option. Under that system, families can purchase a contract before their child enters the ninth grade and invest a fixed number of dollars at various points during the life of contract. When the student enters college, the state will pay the equivalent of in-state tuition for the student's college education.
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