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Too late to buy the dollar

by Henrik Langebaek, staff writer

Why does my tuition keep on getting more and more expensive every semester? Is HPU jagging up the tuition? Yes, but the 5 percent increase effective this summer is not what hurts European students the most.

Most European students at HPU realize that every time a new semester comes around it takes more of their currency to pay the same tuition. In my case, tuition has increased by 10 percent from last semester because of this, which means my tuition went up 15 percent. Iím from Denmark, and my countryís currency, like the currencies of all European countries, is weak relative to the U.S. dollar.

All the European economies are weak relative to the U.S. economy, as anyone who is currently looking for a job in the European countries knows. Unemployment is up in the Euro zone (the European common currency area), and inflation has started to accelerate. So whose job is it to fix these economic problems? The European Central Bank. The ECB is the equivalent to the Federal Reserve Bank here in the United States. Its responsibility is to collect and analyze the economic data from the European Union member countries and set interest rates to keep the European economies balanced between growth and inflation. The thing is that itís not only the member countries that are affected by the ECBís decisions, but also the remaining countries in Europe, because they are all closely connected.

We all know that U.S. Federal Reserve Chairman, Alan Greenspan, has cut interest rates eight times over the past eight months to keep the U.S. economy from sliding into a recession. Why doesnít the ECB just do the same?

According to Michael Lewis of Deutche Bank, it should do just that. But it hasnít. In spite of U.S. encouragement to lower interest rates in Europe, the ECB kept its current rate unchanged at its meeting in the beginning of July. The ECB inaction caused the dollar to appreciate and the European currencies to depreciate, and this has been the case throughout the past year. This is probably the single most significant reason European students at HPU have to cough up more for tuition every semester.

So what can we do about it? To be honest, there isnít much we as insignificant college students can do. Just sit tight and hope for the best. If you didnít buy dollars for tuition and living expenses several months ago, then youíre up for an unpleasant surprise next time you go to the bank to exchange European currencies for dollars.

 

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