Ever problem. So beyond cutting tuition, another fraction of

Ever wonder if college even worth it? Everyone, if nottalking about it, has at least heard about the negative effect thatthe student loan crisis has had andwill continue to have.   According to the article “Student Loan Debt In 2017: A $1.3 Trillion Crisis” Zack Friedman the founder of Make Lemonade, states that there are more than 44 million borrowers with $1.3 trillion in student loandebt in the U.S.

alone and is rising by the minute.   Theaverage student in the Class of 2016 has $37,172 in student loandebt. This realization is concerning to all involved. The article “It’s Time toBroaden the Conversation About the Student Debt Crisis Beyond Rising Tuition Costs” states “This student loandebt crisis is a subject of increasing consideration, research, and analysis by federal governmentagencies, nonprofit organizations, economists,and the students who carry the balance.” The costfor a college education continues to climb higher and higher while Financialassistance has declined by 26 percent from the mid 1990’s and “the average annual cost for a publiccollege in the US is now $9,700, while private Ivy League institutions charge a massive sum of almost $70,000. This is in a country where the median annual salary is$50,000.” The number of dropouts with federal loans at these institutions hasgrown from 35,443 in 2007-09 to more than 56,600 in 2013-15(cite). During that time the median student debt at most schools almost doubled.

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And most students who leaveschool before graduation don’t make it back. A study of the California State University system found that only 30 percent of students who drop out re-enroll at their original college. https://www.pbs.org/newshour/education/students-school-debt-no-degree-get-stuck-pugatoryTuition is not the only reason for the student debt problem. So beyond cutting tuition,another fraction of the debt that needs to be consideredand controlled is the fact that students are alsoborrowing money for cost of living and depending on the school, living expenses such as room and board can easily amount to $20,000 or more per year.

 In an interesting article a Washington doctor writes “First, I was 32 years old as Ibegan training and I now had over$230,000 in debt. Had I invested my talents in other pursuits such as lawschool, I would not have built up this level of debt. Also, as I did not start saving when I was younger,financially speaking, I have lost the past 10 yearswithout the ability to save and invest to earn compounding interest.” https://www.google.com/search?q=debt+images&rlz=1C1CHWA_enUS632US632&source=lnms&tbm=isch&sa=X&ved=0ahUKEwiTm-PnxYPYAhVMct8KHQ5cAQQQ_AUICigB&biw=877&bih=419#imgrc=vGHS2rpNAMHVNM:In another statistic Georgia’s publiccolleges and universities between 2013 and 2015, 108,000 students withdrew withthousands of dollars in federal student debt but no degree. “The numbers ofstudents with school debt but no degree is large enough that the financialimpact goes beyond individual struggles and weighs on thestate’s economy.” http://hechingerreport.

org/debt-without-degree-the-human-cost-of-college-debt-that-becomes-purgatory/)Unless the current condition is dealt with, the US will be left with many young peoplestruggling with the debt they are probably not going to be able to pay back, which will result in a depleted economy. The generationthat has to deal with the student loan bubble will have  more than half their salary going towardsstudent loans which means houses, cars etc. aren’t being purchased.

It was alsorevealed that by 2025, more than 60 percent of Georgia jobs will require somekind of post-secondary education, and currently only 45 percent of the state’s young adults meet that hiring requirements. Students entering the work force are realizing that there are no jobs in their fields,forcing them to take low paying jobs but not making enough money to pay theirloans.    Career choices, as well asachieving other financial goals, suchas saving for retirement are being negatively impacted by the excessive amountof student debt.

  More and more students are experiencing depression atthe uncertainty of their future. I have seen 1st hand evidence that this can make someone depressed According to the article “The student loanbubble threatens to burst” Rachel Connolly states that student loan debtin the US has shot up by over 170percent in the past decade. This debt has grown primarily by alenders who are lending money to18-year-oldswho have no financial knowledge, no credit history and no reason to educate themselves on basic things like interestrates, how the loan will get paid orthe amount of time it will take to repay the loan. Thisunregulated practice by lenders is being compared to the “global financial crash” by theBusiness Editor of the Financial Times, Rana Foroohar.  As aresult, young people like my son find themselves not being able to afford tolive on their own let alone buy a home, so he ended up moving back home with me.  Even worse, the dominoe effect this would have on the economy should cause concern forall.  Consumer spending will diminish and the US economy will continue tobe substantially impacted by the increase in student debt.

  Presentlydefault rates for school loans are at an all-time high, higher than those ofcredit cards, car notes and even mortgages all due to lenders collecting fromstudents regardless of salary. Unfortunately, as well as troubling, this is theonly kind of debt for which this is the case. According to Donald M.

Feuersteinin the article “What Is Driving the Student-Debt Crisis?” He states,that “Twenty-seven percent of loans in repayment are delinquent, andmost of them are expected ultimately to default, threatening hundreds of billions of dollarsin taxpayer losses and creating millions of financial basket cases for our consumer-based economy.” Yes, there are similarities to the housing bubble andthe current student loan system: both involve money easily lent to susceptibleborrowers to enable them to buy a product that is quickly increasing in price,but with uncertain returns. If this bubble burst, there is going to be a big mess,resulting in a lot of personal debt and lack in consumer spending. Change willhave to be put in place by policymakers and employers to carefully deflate thebubble. Like the role of housing in the run-up to the global financial crash,the value of an education is highlyoverinflated, but until the bubble bursts, it is hard to see why students would stop buying into it.Changes like the increased “student grants”, financial aid, default rates,total reliance on federal aid, income-driven repayment plans, lower interestrates and forgave unpaid balances at maturity” were implemented withoutconsidering what effect this would have on the economy These changes might easethe burden temporary but will not solve the problem In fact, government fundingmight actually drive spending, shifting the burden over to the tax payer Additionally, according to Feuerstein “The write-offs in IDRPs even fall outside the government’s 10-yearbudget-scoring window, adding to the national debt without any fiscalaccountability.” Although higher education does open some doors to financialfuture the average income for students once they’ve completed school has notkept up with the risingtuition cost. Add to this thereduction in government support, really leave families no choice butborrow more and more money and even though students can obtain federal studentloans fairly easy some studentshave chosen to get private loans in order to complete their education not considering allthe ramifications such as variable rates, limitations on deferment etc.

that comes with goingthru a private lender. Nonetheless, as long as young peoplebelieve that people with degrees earn more money than without they willcontinue to pursue a college education regardless of the risks associated withstudent loans. In the article Connally also suggest that one possible fix would be how employers and society view degrees.  If employers can entice enough young people away fromthe student debt trap by considering qualifications instead of, or as important as college degrees would relieve some of the pressure currently being felt by theeconomy or better yet the prevention of a total crash. Therefore, instead we need tocome up with real solutions to change the future of education and how it impacts students,businesses and society.  Several ideas running through my head would be toeliminate a lot of the four-year degrees to a 2-year degree, the development ofemployer sponsored apprenticeship as well as a 2 year mandatory enrollment ineither the military or Peace Corp all relating to the desired field or career path.

Yes, ultimately it is the responsibility of the student to fully understand what is required and fulfill thecommitment made.  But we all have contributed to the impending burst,therefore we all need to help find solutions and ensure that this does nothappen again. Parents and students need to get educated so that good decisionscan be made on behalf of the students, lenders need to be held accountable fortheir carelessness in loaning money out as well as questionable lendingpractices and unive