These are really sad times indeed. What I mean by that is in the terms of peoples wants for gaining knowledge and furthering themselves for the betterment of society, and humanity. It will be very sad when those with deep passion in a field are not able to continue on (which happens plenty enough now).
I think everyone is gravely underestimating the financial crisis that is, and will be. I will be one of those unlucky ones apply to grad school in the next 2 to 3 years, and to be honest, I am very worried about future prospects.
I foresee a lot of people flooding back into school. First reason: People that have had job loss will want to a)either upgrade their current education to land a job or b)pick a new field of work and thus will need to learn material for their new career path. This will lead to a huge increase in applicants, not only to grad schools but undergrad as well (since I bet people will opt to do second undergrad degrees in their new career choice) ... this will trickle down and affect students finishing high school. This will then lead to those not accepted to go after jobs, but will find out getting hired with just a high school diploma, and no experience, will not get them jobs so they will keep applying to schools (thus keep increasing the applicant pool as each year goes by). Jobs that would have went to basically high school grads, and summer student workers wont be available because older applicants with more experience will fill those positions because they either need any money to support families or debt (and they will probably work 2 or 3 jobs to make ends meet).
Second reason: Many will try to "ride out" the financial crisis. Many will perceive the financial crisis as a short-term problem, so school (and things like student loans, lines of credit) will seem like an attractive way to offset complete bankruptcy and unemployment, again to make ends meet and support family or debt. They will be willing to do this because they will see it as short-term and although they will come out with more debt, they will feel that it will open up new job prospects and they will thus perceive themselves as "riding out" the problem of losing everything they have.
But the next 5 to 10 years will be very uncertain. Those in good positions (or even mediocre ones), that dont end up losing their jobs, will hold on to them as long as they can. Hell, even those in crappy positions will do anything to keep them, because like I said, any income will be better than none. Many wont retire because they know their social security payments (or retirement savings, and packages) will not be enough to make ends meet. And those that do retire will end up coming back into the workforce to pay bills and things they need (just look at all the seniors working in places like Wal-Mart).
Those that finish grad school will have better chances than others, but many will find it difficult since those they should be replacing will hold on to their positions like grim-death.
