Panel addresses student economic concerns

A group of four panelists from Luther’s faculty and staff gathered April 15 to speak about the effects of the current economic crisis and the effect on Luther and its students.

They presented an explanation of the cause of the economic decline, how Luther is affected now and how it will be in the future, and what the job market outlook is for prospective graduates.

Bruce Wambheim, visiting instructor in economics, spoke first and gave an overview of the current economic crisis, specifically citing the sub-prime mortgage crisis.

Despite recent glimmers of hope, Wambheim believes that the economy has yet to bottom out. As for possible solutions for the current economic situation, Wambheim believes that with proper caution and risk assessment, the same financial tools that contributed to the current crises may aid the recovery.

“Mortgage-backed securities are potentially a solution,” Wambheim said. “We just need to help the banks. We can be successful.”

Arleen Orvis, controller, touched on the impact of the economic crisis on the Luther endowment, budget, cash flow and what this means for future Luther students.

“Luther has been fairly insulated from the credit crisis, but it’s the endowments that have dropped from $120 million in May 2008 to $90 million 10 months later, but we consider ourselves fortunate to be down only 25 percent,” Orvis said.

Other private colleges such as Wartburg are having greater concerns with their money management due to the economic crisis.

According to “The Chronicle of Higher Education,” a newspaper for colleges and universities, “Wartburg carries an $80 million debt, twice the amount that it takes annually from tuition and other revenues.”

This has raised red flags with Wartburg’s accreditor and created tension among the faculty, students and citizens of the community.
Fortunately for Luther, its debt is lower than some colleges’, the interest rate remains competitive and the comprehensive fee increase is the lowest it has been in nine years.

“As far as the comprehensive fee, all of this is going back to financial aid,” Orvis said. “The budget is very dependent on enrollment, but new student numbers look good.”

Financial aid at Luther is an ongoing concern for many families suffering from the economic downturn, but Janice Cordell, director of Financial Aid, assures that additional financial help can be found.

“[Even with] the Iowa Tuition Grant dropping, there hasn’t been a decrease in what is offered to students,” Cordell said. We are working to qualify students for additional financial help and there are many scholarship opportunities posted on our Web site.”

Luther’s financial aid options come mainly from four sources: the federal government, the state of Iowa, private lenders and outside scholarships. With an overall decrease in available money for families, Luther offers opportunities for additional financial help in a number of different ways.

“We have additional federal resources, new programs for financial aid, an economic stimulus package, federal teach grants and forgivable loans,” Cordell said.

By utilizing all financial aid resources, Cordell hopes that Luther will remain affordable to current and future students.

Luther students are also concerned about the unstable job market. Mark Peltz, director of the Career Center, spoke about the job market outlook for Luther graduates.

“We watch the job market from a few different ways and things fell apart really quickly from September to January,” he said. “It is striking how quickly things deteriorated and the class of 2009 has had a 22 percent decrease of jobs.”

Despite the cutback of hiring positions, there are also many areas of the job market that have a positive future.

“It’s tough to predict what areas are doing well, but the entertainment sales are going up, the federal government is hiring, counseling professions and financial services and planning also have positions available,” Peltz said.

Graduate school and volunteer organizations are also popular alternatives to avoid the job market in the current economic crisis.

“Seven to eight percent of students go into volunteer work full-time, which is a great option for students wanting to take a year before grad school for additional experience,” Peltz said. “It’s very affordable and a good decision. Some like AmeriCorps provide health insurance and housing.”

Even with the current economic crisis, alternatives can be found to shed light on every situation.

“This is going to make me search a lot harder and be a lot more determined to find a job, and also motivate me to seek more scholarships to get through these times of economic crisis,” Jenni Arbuckle (‘11) said.