One of the main challenges college students face is having enough money to live a relatively comfortable life while still paying off student loans, paying for textbooks and trying to cut checks for rent and utility.
Well, fellow K-Staters, I hate to inform you that these hurdles might have just gotten a little harder to jump.
Between a recovering economy, government legislation and even mother nature doing its part, the financial prognosis for the coming year calls for us to keep an even tighter watch on our money.
Here are the top economic issues for students to consider in 2013:
1. Rising prices for higher education
The rising cost of acquiring a college education has been well-documented for several years now, and it seems that the trend will continue. This time the increase in costs won’t focus on rising tuition, but rather the significant increase in interest rates on subsidized government loans.
A subsidized loan, or a loan on which the interest payments are deferred until after the student graduates, is traditionally a need-based form of government aid designed to help students avoid the pressure of education debts while in school.
According to an April 2012 article USA Today article, some federal financial aid, such as the widely-used subsidized Stafford loan, will be subject to annual interest rate increases from 3.4 percent to 6.8 percent, or double the previous rate.
This policy is only applicable to loans taken out after July 1, 2012, so many upperclassmen would be exempt from the increase. According to the Department of Education, however, 7 million undergraduate students across the nation will be affected by the legislation.
For those students who fall into this category, it may be worth your while to figure out a detailed repayment plan to avoid unpleasant surprises after graduation.
For those who plan on staying in school for as long as possible, your victory lap(s) may have just gotten a lot more expensive.
2. Increase in payroll taxes
Although technically Congress is not increasing taxes, they are letting a Bush-era tax cut expire, and the result will still be the same; a two-percentage-point increase in payroll taxes.
Students, who are often paid minimum wage, and other low income individuals will feel the pinch, said economist Joel Naroff in a Jan. 22 USA Today article.
Naroff said this additional tax burden will take away disposable income for those in the lowest tax bracket, leading to possible changes in spending habits that will account for the increase in tax expenses. According to economists at JPMorgan, estimates show a national spending reduction of $125 billion.
Regardless of what your position is on tax policy, the fact of the matter is that students who rely on low-income jobs will have to tighten their belts and budget due to a smaller paycheck from now on.
3. Rising food prices
Not surprisingly, the Midwest drought in the summer of 2012 is still taking a toll.
According to a October 2012 NBC news article, prices for common food items such as soybeans and wheat shot up as high as 40 to 50 percent during the summer of 2012, and the trend is expected to continue.
In 2013, experts predict that prices for food products will rise by 3.5-4 percent. Though this may not seem like much, it adds up every time you go to the grocery store.
Businesses who will feel the pinch of rising costs will also likely raise their prices to cover their expenses.
Students can create a more stringent food budget for themselves in the coming months. Those that eat out constantly, consider making a few more meals at home. Those that cook regularly, prioritize at the grocery store — maybe you don’t absolutely need that $40 ribeye steak today.