Inflation affects all Americans, regardless of race, gender, or creed. Inflation is defined as the general increase in the price of products, and is a normal indication of a growing economy. The monetary policy of the United States is controlled by the Federal Reserve. Inflation is considered normal when it is two percent, however, the rate is currently at more than seven percent.
According to the Federal Reserve this is the highest rate in decades. Inflation has now become a dinner table issue for many families–especially for those who already live on a tight budget, such as college students. This includes students at Queens College, who have seen a rise in both personal and academic expenses.
What is causing this inflation? Julen Esteban-Pretel, a professor in the economics department at Queens College, states: “Temporary forces such as high demands are playing a role in increased inflation.” Dr. Esteban-Pretel also explains that “Supply chain issues are playing a major role in higher inflation… The Federal Reserve will act and increase the interest rate.”
What might the effects of such an increase on college students? According to Dr. Esteban-Pretel, “Higher interest rates will affect students getting a job, paying a mortgage, or getting a loan”—all of which will become more expensive. However, Dr. Esteban-Pretel believes that increasing the interest rate is a necessary response, “Increasing the interest rate causes people to borrow less which causes people to consume less which reduces demand and reduces inflation.”
The impact of an increased interest rate by the Federal Reserve will not be felt for a while; in the meantime many students will have less purchasing power. One possible solution to benefit students is increasing financial aid to match inflation. However, Dr. Esteban-Pretel cautions that, “Increasing FAFSA financial aid is beneficial but that will cost a lot of money [so] cheaper loans or subsidized loans can be beneficial to students.” The Federal Reserve’s decision must be well thought out because of the impact it will have on college students entering the job market or starting a business.
According to Rebecca Oppenheimer, a freshman majoring in economics, “wages and salaries [of students] are going to have weaker buying power” due to inflation, which can make it difficult to afford textbooks, necessary online programs, and sky-high tuition. While Oppenheimer credits the government for taking certain actions such as “The increase of government financial aid” to help students out, she is not certain this will help all students at QC. Oppenheimer explains that students who will be most affected by such high inflation are those who will have to pay a higher tuition and, “Pay presently out of pocket.”
Kyle Daniels, a freshman majoring in psychology, works to help pay for college. He remarks that “Inflation only adds more stress and turmoil.” Daniel expresses concern for working students because “Most college students have a low income and find it arduous to pay for personal and college expenses.” Daniels voices sympathy for students whose “Families aren’t financially capable of assisting them.” In the view of Daniels, there would be light at the end of the tunnel if, “FAFSA were to increase their aid” but Daniel thinks that “The long-term solution would be to decrease inflation.”
Nearly every student will feel the effect of inflation and will be a topic discussed by both economists, as well as the average students of Queens College.