The recession is putting pupils off applying to university - nearly one in four youngsters are now saying they cannot afford it.
Unemployment figures released on Wednesday revealed a sharp rise in numbers on the dole, with 1,864,000 claiming benefit.
And there was more bleak news from John Varley, the head of banking giant Barclays, suggesting house prices will collapse further over the next year bringing the total drop to around 30 per cent.
Now the economic gloom is beginning to hit the country's 16 to 18-year-olds. Many admit the financial crisis is putting them off going to university. Nearly half say it is having an impact on the course they are considering.
New research commissioned by Inspiring Futures, careers advice specialists, found that more than a third of the 2,000 young people questioned were worried about how they were going to pay for courses and living expenses.
The findings come on the back of a warning given by the schools minister Jim Knight last month who said that parents struggling with mortgages would lead to pupil's behaviour deteriorating because of the stresses at home.
Deborah Eyre, an Inspiring Futures trustee who is also professor of education at Warwick University, said the impact of the credit crunch had now caught up with a group not previously associated with it.
"There is a developing trend of anxiety among young people," she said. "I think more and more young people are reticent about asking for money to help them with their studies and that families are reticent about giving it to them. A lot are concerned about the mountain of debt they will rack up."
Professor Eyre said she expected to see more children choose a university in their home town in order to save money by living at home.
She added that some would choose a more vocational course in the belief that it will help them get a job once they have completed their studies.
"Their future employability is a factor so young people are concerned about their university choice," Professor Eyre said.
"It's bad news if they make a poor choice and when money's tight the consequences are considerable."
The impact of the credit crunch would mean that school pupils would need better careers advice than they were getting, Professor Eyre said.
In all, 70 per cent of those questioned said they wanted better advice on graduate job opportunities to help them choose a course.
ADVICE 'NOT SHARP'
Professor Deborah Eyre, of Warwick University education department, has said careers advice offered to pupils is not good enough."It is not sharply focused and is very limited," she said.
Pupils usually begin to get advice in Years 10 and 11 from both specialist teachers in schools as well as from the local council.
But Professor Eyre said: "Young people are not very clear on the consequences of the decisions they make. These are issues which are important generally, but in a credit crunch these become accentuated as the reality of a poor decision becomes even greater."She added that careers advisers had to give better guidance in terms of telling pupils what subjects they needed to take to go on to higher education.