By Zac Garripoli

The latest crisis on Wall Street will surely influence students now and for years to come, according to professors and University financial aid officials.

Lehman Brothers, a Wall Street holding firm and investment bank, filed for bankruptcy protection on Sunday. Just 24 hours later, Merrill Lynch, another financial giant, sold itself to Bank of America for $50 billion. Students around campus had varying concerns.

The crisis will affect the economy of the entire region, as well as the federal economic system upon which many students rely for their student loans and financial aid. “The government will likely absorb some of these losses,” said Martin Melkonian, University professor of Economics. “That will lead to a greater deficit, and thus greater possibility that interest rates will rise.”

This is not an isolated incident: The federal government bore the brunt of the collapse of Bear Sterns in March when it made a $30 billion loan to force its purchase by J.P. Morgan, and a quarter of the Federal Deposit Insurance Corporation’s (FDIC) funds were wiped out by insuring California’s IndyMac Bank.

“This is just another incident in the broader situation of the financial system,” said Constantin Alexandrakis, University professor of Economics, “It’s part of a growing trend.”

And this trend is becoming increasingly detrimental to everyone, not the least of whom are students trying to secure new loans and pay off old ones. “As the banks lose money, less is available for borrowing,” Alexandrakis said. Also, as fewer loans are given out, lenders will demand a higher rate of return, leading to higher interest rates.

“Over time, existing student loans will be affected by the long-term interest rates that are likely to rise,” Melkonian said. Students who are safe with a fixed interest rate during their college years may leave school to find far higher interest rates than they anticipated when they received the loan.

The most relevant problem to current students may be the status of their Stafford loans. When a student is guaranteed a Stafford loan by the government and through the University, he or she must still select a private bank to work as the intermediary lender. However, this is becoming more and more difficult. “A lot of smaller banks and credit unions in the Hofstra network have been pulling out of student loans,” said Jason Scharf, a University student financial aid adviser. “It happens every single day; they’re just not participating.”

The University’s previously-extensive list of lenders is steadily shrinking. Students who partnered with larger banks such as CitiBank and Wells Fargo haven’t had any trouble, but those who chose smaller lenders could hear from the financial aid office at any time.

“We are constantly calling students in to fill out all their paperwork again,” Scharf said.

Students themselves were concerned with their financial future amid the turmoil. “We’ll probably have to pay more for school, and it’ll be harder to get a job when we get out,” said Peter Hoack, a freshman.

Sophomore Josh Gwin’s fear is that “interest rates will go crazy for awhile,” but he hopes that “eventually it will serve as a catalyst to force the government’s hand into reform.”

Many at the University aspire to careers in financing, banking or stock trading, but Melkonian believes students may adjust their majors because of the most recent crisis. “Careers in finance, banking, stock exchange, insurance and real estate will be far more limited in the future. There will be great shrinkage and limited new job opportunities in these fields for years,” Melkonian said.

He estimated 40,000 Long Islanders will lose their jobs because of this financial crisis, with the lack of employment decreasing consumer spending, leading to more lost jobs. Students graduating into a region full of unemployed workers will have difficulty finding a job, and without a job, will be hard-pressed to pay off their student loan.

“Will the next government step in to aid students with more grants, to invest in the people of the country’s future, and lower the cost of an education?” Melkonian asked, echoing the question students are asking all over campus.

He does maintain a hope that “the next government will be much more accommodating to investing in students’ futures.”