With the bankruptcy of many companies, the bailout bill passing, the jobless rate growing, and the markets tumbling, Wall Street is in crisis. Low interest rates and serial lending are now haunting the markets. But as parents of lowly college students, what does it mean for you and them?
Banks like Washington Mutual and Wachovia have failed and have been bought out by larger competitors. For those of you with bank accounts at WaMu and Wachovia fear not.
The FDIC (the Federal Deposit Insurance Corporation) was created after the Great Depression just for this. The FDIC will guarantee all the money you have in a bank account up to $100,000. Since you're a college student who likely doesn't have more than 100k sitting around, your money is safe.
On the loan front, we've already seen lenders close shop or stop disbursing student loans. Getting a loan with no credit history is virtually impossible now, which is to your benefit. Not having to deal with high interest rates after college is a gift. Instead, as a parent who has good credit, being a co-signer betters a students chances for being approved for a loan and receiving a low interest rate.
Finally, for you parents with 529's or other college saving plans, consult your financial advisor on the composition of those plans. Many parents choose to put money in mutual funds, funds with a diverse range of stocks, to finance college.
Depending on the stocks that make up these plans, mutual funds can take a hit in tough economic times. Of course, these funds are meant for long-term investment and panicking at every economic slowdown isn't wise. Still, by consulting with a financial professional, parents can see if they need to reevaluate these plans to protect what's there and avoid costly losses.
If you want to wise up on the current financial landscape, used resources like the The Wall Street Journal, The Financial Times or other financial websites to stay abreast of the news.
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