THE ECONOMY IS rife with uncertainty from New York to Reykjavik to London.

A U.S. recession and global financial meltdown have prospective college students and their families wondering if this turmoil will derail their dreams.

I sat down to sort this out with economics professor Anne Villamil at the University of Illinois. Luckily this was easy enough to arrange, since she's also my mom. She gave me the following overview of the issues involved in our current troubles. I also spoke with Uni college counselor Lisa Micele to find out if the recession has had any noticeable impact on the Class of 2009's college application process.

So what's so bad about a recession?

PAYING FOR COLLEGE: This chart shows how the mix of college grants and loans of all types (government and private) has changed over time. The amount of grant aid has not declined. Instead, the percentages have changed due to a big increase in the amount of loans taken out by students. College Board graphic (click to enlarge)

Recessions are defined by the National Bureau Of Economic Research as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment, industrial production, and wholesale-retail sales."

On Dec. 1 the National Bureau of Economic Research declared that the U.S. is in a recession, which began in December 2007.

When I spoke to Professor Villamil, I was shocked to hear that this is 11th U.S. recession since World War II.

"Our most recent recessions were in 1991 and 2001, and we had a financial crisis in 1987," she said.

She was quick to assure me that although recessions and financial crises can be painful, the general trend of the U.S. economy is decidedly up.

"The average recession lasts for 10 months, but the average expansion is much longer, 57 months," she noted.

So chin up, this too shall pass — in time.

The effect on paying for college

WHERE FINANCIAL AID COMES FROM: This chart shows the composition of financial aid to undergraduates, excluding private loans (private loans carry no subsidy, therefore they are not aid). College Board graphic (click to enlarge)

But will the recession and credit crunch affect your ability to attend the college of your choice in your appointed year of matriculation?

"Problems in financial markets have lowered the value of family savings, and job loss or hour cutbacks affect families' ability to pay for college," Villamil said.

"College endowments and other funds have dropped, which could make it more difficult for colleges to provide grants to students. The credit crunch may also lead to higher private loan costs, fewer lenders and tougher lending standards, making it more difficult to get loans. However, it is not yet clear how severe this problem will be."

She also pointed out that applications to well-ranked in-state public institutions are likely to rise because they offer high value.

To get a clearer picture of the connection between Wall Street and 1212 W. Springfield Ave., let's turn to the College Board, well known in the halls of Uni for a cornucopia of tests.

The College Board also collects data on financial aid, and it reports that last year undergraduates received an average of $8,896 in financial aid, including grants (aid that does not need to be repaid) and subsidized loans.

There are three basic ways to get loans for college: directly from the federal government, through private lenders but with government guarantees and interest-rate subsidies, and strictly private loans with no guarantees or subsidies.

This is where the credit crunch comes in — banks are cutting back on loans.

When I asked if these loans would continue to be available, Villamil explained that "the U.S. government has intervened massively to restore the flow of credit, including for student loans. The new administration is likely to address the problem as well."

On Oct. 10, as part of a broad program to ease frozen credit markets, the U.S. Department of the Treasury announced a federal bailout to restore the government-guaranteed student loan market to "normal operations."

So what is a Uni student to do?

THE IMPORTANCE OF LOANS: This chart shows how loans have become a bigger part of the mix in paying for college, with private loans growing from 3 percent to 13 percent of the total. College Board graphic (click to enlarge)

There are growing fears in the U.S. that some students will not be able to afford higher education due to difficulty in getting loans or declines in family income and savings.

In fact, college tuition and fees have risen a staggering 439 percent since 1982, while the median family income has risen only 147 percent.

Students from lower income families are likely to be hit hardest, especially if tuition rises even more to offset losses from the downturn.

When I asked college counselor Lisa Micele how the financial crisis was affecting Uni seniors as they applied for college, she said there were no real changes in the way students were selecting schools.

"However, I have seen a change in students applying to early admissions," she said. "Many parents ask me if applying early decision is a good idea because you can't see other financial aid offers."

Micele suggests that students not commit themselves to a university too soon in order to keep their options open. She also said that scholarships given on a needs basis have not been deeply affected (but this can vary for each state).

Although we cannot change the economy, we can research schools' financial aid programs.

Remember too that we are lucky. We live in a town with a great university, and if we ask nicely, and all else fails, maybe our parents will extend the lease on that room we've been sleeping in for the last umpteen years.

So maybe in this downturn we should ask: Mother, can you spare a room?