WASHINGTON-The economic recession has taken a toll on local businesses and college students, forcing many of them to make adjustments.
At the very time students and businesses seek to borrow more money, financial institutions are restricting their lending. This makes it harder for students to finance their education and businesses to borrow money for maintenance, renovations, and expansion.
According to a New York Times article, “Bill Clears Way for Government to Cut Back College Loans,” federal and state governments have cut back on many education and financial aid programs, because of tight budgets. The shortage of financial aid has left many students in a bind. College endowments and related student aid have decreased, forcing students to find other means to help pay their college tuition and expenses.
“I had to take out more loans, work all summer, and possibly work during school so I can survive this year,” said Joseph Johnson, a senior at the University of Cincinnati.
Johnson is not alone. In the “Report on the Impact of the Economy on College Enrollment,” 34 percent of the 1,030 students surveyed said the economy has caused them to modify their college plans by changing their choice of school and or major, getting a job, and attempting to get more loans. The Enrollment Management and Product Solutions survey was conducted by Longmire and Co., which helps clients improve their sales.
Robert Moore, the president and CEO of the Development Corporation of Columbia Heights, has also witnessed the effect of the economy on college students.
“Not much philanthropy is happening, so less money is available for student aid,” Moore said. “Our student interns are struggling to (finance) their living expenses and college costs/”
Since banks have cut back on commercial loans, small businesses are also hurting, particularly those located near colleges and that have a student customer base.
“The recession has affected our business, because banks are not loaning money or helping with anything,” said Ghennet Solomon, owner of Mystic Salon Inc., a hair salon on Georgia Avenue.
“I can’t even open a new credit card for the salon,” Solomon said.
The lack of available financing stifles business growth and limits their ability to purchase new merchandise and equipment, renovate their buildings and take more risks. Many businesses are simply focusing on surviving and keeping their business alive.
“Businesses have to be a lot smarter,” said Juan Powell, Principal of Neighborhood Development Company. “They have to be aware of the environment, understand where opportunities lie and streamline their operations.”
Many businesses are altering their marketing and pricing strategies to remain competitive and keep their business alive. Maria Hall, manager at Torries at Wilson, a local soul food restaurant, is attempting to attract more Howard University students by offering a 10 percent student discount at the restaurant.
Last Stop, an urban clothing store near Howard University, is using discounted pricing and attention-getting marketing to attract customers. The signs in its window and inside the store tell the story: “One pair of jeans for $9.99.” “T-shirts are 5 for $20,” “Buy one get one 50% off.” Although businesses reduce their profits by discounting prices, they use these incentives to generate foot traffic and income.
“Retail is very slow now that money is tight, so some days are slower than others,” said Matt Holsey, a Last Stop employee. “All we can do is hope that customers come and spend money in our store,” he continued.
The economic downturn has increased unemployment and adversely impacted the supply of available jobs. Keith Sellars, senior vice president of the Washington DC Economic Partnership, said students are having trouble finding jobs after graduation.
According to the Job Outlook 2009 Spring Update Report conducted by the National Association of Colleges and Employers, employers hired 22 percent fewer college graduates in 2009 than they hired from the class of 2008.
The lack of available jobs has prompted many students to use unpaid internships to acquire experience, become more marketable and build a network of contacts for future job employment. Some students are questioning their decision to go to college.
“I went to college, so I can get a job when I graduate, but now that the economy is in a mess, I sometimes think that I’m wasting my time because I may not be able to get a job when I graduate,” said Ra’Phael Freeney, a Texas Southern University sophomore.
Without a doubt, the current economic recession has left many students and businesses with unpleasant choices and unease about the future. Businesses are cutting back on employees, scaling back their investment plans, and engaging in discount pricing and aggressive marketing to attract customers. Students are altering their plans, questioning their choices and revisiting their options.
Despite this dim scenario, Terence Kizer, a junior at Wittenberg University in Springfield, Ohio, remains optimistic.
“All I can do is hope for the best, and try to not let the state of the economy derail my future success.”