How does the Great Recession impact students ten years later?

In 2008, the United States suffered their largest period of economic decline since the Great Depression. This crash, known as the Great Recession, devastated the banking and real estate industries and financial markets and caused millions of Americans to lose their homes, jobs and savings.


This incident can be traced back to the “subprime mortgage crisis,” a nationwide catastrophe involving mortgage loans. After the housing boom in the early 2000s, mortgage lenders were less restrictive on the borrowers they approved for loans. Financial institutions obtained thousands of risky mortgages to make a quick profit. One of these institutions, New Century Financial, declared bankruptcy in 2007. This was the beginning of the end for the housing market, with homeowners and mortgage lenders ending up “underwater.” This meant that their homes were valued for less than their loan amounts.


The real estate conflict was especially significant for people trying to sell their homes. With reduced values, some couldn’t make a profit when they sold their properties. “ [For my] single mother, it was hard…to maintain a big house, work a full-time job, and take care of me… she tried to sell our house, but the economy made it nearly impossible” says a Milton senior.


But as the U.S. stock market crashed , the recession impacted more than just housing. College students faced with  financial insecurity took out loans to help pay for their education. This resulted in a crisis, and the repercussions are still felt today.


Students who attended college during or after the recession are now paralyzed with student loans. The amount of money owed has reached record high levels, totaling  $1.3 trillion. A 2015 study claims that this can be attributed to tuition inflation due to increased federal loans. According to the study, universities hike their tuition around 65 cents per federal dollar they receive for loans. Former President Obama signed the Revised Pay as You Earn (RPAYE) bill in 2015, which caps borrower’s monthly bills to ten percent of their income and makes them eligible for loan forgiveness after twenty years. However, this has not resolved student debt problems, and President Trump has proposed removing subsidized student loans altogether and replacing RPAYE with a more streamlined borrowing program.


With the housing and banking industries improving, the question of why a college education is saddled with massive costs remains. The 2008 recession may seem like it happened long ago, but its effects are still felt today and will be present for generations to come.