The annual inflation rate in the US accelerated to 9.1 percent in June of 2022, the highest level in forty years. Inflation is a new concept for our generation, and we had the privilege of growing up in an economy where inflation rates were steady and low. Therefore, today’s college students do not know much about the monetary phenomenon and what causes it. However, they do know and feel the effects of inflation sharply, especially in the past few months. But what specific effects does inflation have on Ames students? How terrible has the situation really gotten?

In basic terms, inflation is a general increase in the prices of goods and services in an economy. If you took Econ 101, you might remember that when demand exceeds supply, prices usually rise. When price increases occur, people see a reduction in their purchasing power, meaning that each unit of their dollars buys fewer goods and services.

Inflation has affected the entire nation, and ISU students might face even higher costs of living and tuition as a result. Colleges around the country are hiking tuition, and Iowa State University is no exception. 

In a recent Iowa State Daily article, Katherine Kealey reported that an Iowa State graduate student is homeless for the summer because she is not making enough money to cover her expenses.

High inflation is problematic, especially because the effects fall most heavily upon people with low incomes, such as students on a fixed income. This is the exact reason the majority of the students are disproportionately impacted. We face price increases for tuition, food, housing, utilities and travel.

You might be wondering how long we will bear the current economic burden. We must look at who combats inflation and how to answer the question.

The Federal Reserve Bank, aka the central bank of the United States, raises interest rates in an effort to curb inflation. Unfortunately for students, that includes federal student loans. A recent announcement by the Treasury Department stated that student loan interest rates will increase for the 2022-2023 school year. 

Even though the federal government promises to bring down inflation with higher interest rates, this is not certain that it will. History shows us that big economic busts usually follow big economic booms. Don’t anticipate price increases to level off soon.

It is good to be optimistic about the future, but I believe it is better to be resilient and prepared for the tough times ahead.