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What Does a Recession Mean for University Students?

• November 16, 2022

What Does a Recession Mean for University Students?

The Bank of England recently warned that we, the UK, are headed for its longest recession since records began. University students are among the groups of people who are most affected by a recession, but what is a recession?

Defining a recession and how it differs from an economic downturn
An economic downturn is a general slowdown in economic activity over a period of time. A recession is more severe and is defined as two consecutive quarters of negative economic growth, as measured by a country’s gross domestic product (GDP).

In the UK, we measure GDP by taking the total value of all the goods and services produced in the economy and then subtracting the cost of imports. If GDP growth is positive, then the economy is growing. If it’s negative, then the economy is contracting.

In a downturn, we might see businesses close and unemployment starting to rise. But in a recession, we would expect to see these things happening on a larger scale. This means that the economy is shrinking and this can be caused by a variety of factors. For example, a decrease in consumer spending, an increase in taxes, or a decrease in government spending.

Recessions can also be caused by an increase in interest rates. This is what is happening around the world right now. When interest rates go up, it becomes more expensive to borrow money, which can lead to a decrease in investment and economic growth.
The effects of a recession on university students

There are a variety of ways that a recession can impact students.

Graduate Jobs
A recession can cause graduate unemployment to rise. This is because when businesses are struggling, they are less likely to hire new graduates as they try to save money. Some businesses will focus on increasing efficiency within their operations rather than expanding and opening new positions.

Cost of Living & Income
It can also lead to an increase in the price of goods and services in many industries. As many businesses attempt to prepare for falling profits or rising expenses, they will increase the prices of their products or services. This means that we all have to spend more money on things like food and travel. This can be especially difficult for students that work minimum-wage jobs while they study or looking for a job after graduating.

As we've seen over the past couple of years, wages cannot keep up with inflation. If the prices of food, travel and other essentials continue to rise, stretching a paycheck can get more and more difficult. In some cases, this can force students into overdrafts and borrowing money.

Debt
In the UK, Google searches for "student credit card" throughout August and September increased by around 50% compared to the previous 5 years. While we are not officially in a recession, this statistic shows that money worries are becoming much more common for students.

As we've mentioned, a recession can lead to hours being cut, jobs being cut and wages stagnating. If students begin losing jobs while studying, or cannot find a graduate job afterwards, it can be difficult to repay that money. This can cause severe financial difficulty and force some people to rely on credit cards and loans to make ends meet.

It's important to remember that if you do find yourself in debt, there are options available to help you manage it. You can speak to your bank about setting up a payment plan or contacting a professional debt management company.
 

Mental health
The recession can hit students particularly hard and take a significant toll on mental health. Students who have part-time jobs might find themselves taking on more work where possible to earn extra money. This can lead to decreasing performance in their studies and in day-to-day life. Some students have even dropped out of university solely due to financial constraints.

The stress of trying to make ends meet can take a toll on your mental health, and the sense of isolation that comes with being in debt can exacerbate mental health problems. In addition, the pressure to find a job after graduation can be overwhelming, especially if there are few jobs available. The mental health effects of the recession can last long after the economy has recovered.
 

How Students Can Get Through a Recession
There are a few things that students can do to weather the storm during a recession

Make a Budget
The first and most important thing is to make a budget and stick to it. This will help you keep track of your spending and make sure that you're not overspending. When making your budget, be realistic about your income and expenses. Make sure to include things like food, travel and entertainment. It's also important to put some money aside each month for unexpected costs.

Get Help if You Need It
There are many services provided by universities and other organisations to help students during a recession. If you're struggling to make ends meet or are feeling overwhelmed, don't be afraid to reach out for help. You can speak to your university's student support services about the options available to you. They can provide advice on things like budgeting, emergency funds, employment and mental health support.

Stay Positive
Finally, it's important to stay positive during a recession. Remember that things will eventually get better and the economy will recover. Focus on the things that you can control, like your spending and savings, and try not to worry about the things that you can't.
 
 

Ways You Can Save Money During a Recession
There are several ways you can save money before and during a recession. Here are a few of the easy ones to help you get started.

Cut Back on Unnecessary Expenditures
This may mean forgoing that daily latte or cutting down on eating out. By cutting this in half, you could find that you save a fair amount each month. This also applies to other products and services. Subscribing to fewer streaming services, lowering your mobile phone plan and many others can have a big impact on how much you can save.

Look for Deals & Discounts
Whenever possible, look for deals and discounts on the things that you need. There are often ways to get discounts on groceries, travel and other essentials. For example, many supermarkets offer student discounts. You can also find deals on student discount apps.

Sell Unwanted Items
If you have any unwanted items around the house, sell them! There are many ways to do this, including online marketplaces and garage sales. This is a great way to make some extra cash and declutter your home at the same time.
 

Some Silver Lining
While it's certainly true that recessions can be difficult times, there are also some silver linings to be found. For example, a recession can be an opportunity to learn new skills. With so many people out of work, there is an increased demand for classes and training programs that can help people improve their employability.

In addition, recessions can also lead to innovation. When businesses are struggling, they have to find new ways to cut costs and increase efficiency. This often leads to the development of new products and services that can benefit consumers and help to spur economic growth. So, while recessions may not be enjoyable, they do offer some advantages that should not be overlooked.

No one likes the idea of a recession, but it is important to be prepared for when it does come. A recession can be a difficult time for students, but there are ways to get through it. By making a budget, looking for deals and discounts and getting help if you need it, you can weather the storm.