Ever problem. So beyond cutting tuition, another fraction of

Ever wonder if college even worth it? Everyone, if not
talking about it, has at least heard about the negative effect that
the student loan crisis has had and
will 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 loan
debt in the U.S. alone and is rising by the minute.   The
average student in the Class of 2016 has $37,172 in student loan
debt. This realization is concerning to all involved. The article “It’s Time to
Broaden the Conversation About the Student Debt Crisis Beyond Rising Tuition Costs” states “This student loan
debt crisis is a subject of increasing consideration, research, and analysis by federal government
agencies, nonprofit organizations, economists,
and the students who carry the balance.” The cost
for a college education continues to climb higher and higher while Financial
assistance has declined by 26 percent from the mid 1990’s and “the average annual cost for a public
college 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 has
grown 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. And most students who leave
school 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-pugatory

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Tuition is not the only reason for the student debt problem. So beyond cutting tuition,
another fraction of the debt that needs to be considered
and controlled is the fact that students are also
borrowing 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 I
began training and I now had over
$230,000 in debt. Had I invested my talents in other pursuits such as law
school, 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 years
without 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 public
colleges and universities between 2013 and 2015, 108,000 students withdrew with
thousands of dollars in federal student debt but no degree. “The numbers of
students with school debt but no degree is large enough that the financial
impact goes beyond individual struggles and weighs on the
state’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 people
struggling with the debt they are probably not going to be able to pay back, which will result in a depleted economy. The generation
that has to deal with the student loan bubble will have  more than half their salary going towards
student loans which means houses, cars etc. aren’t being purchased. It was also
revealed that by 2025, more than 60 percent of Georgia jobs will require some
kind 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 their
loans.    Career choices, as well as
achieving other financial goals, such
as saving for retirement are being negatively impacted by the excessive amount
of student debt.  More and more students are experiencing depression at
the uncertainty of their future. I have seen 1st hand evidence that this can make someone depressed

According to the article “The student loan
bubble threatens to burst” Rachel Connolly states that student loan debt
in the US has shot up by over 170
percent in the past decade. This debt has grown primarily by a
lenders who are lending money to18-year-olds
who have no financial knowledge, no credit history and no reason to educate themselves on basic things like interest
rates, how the loan will get paid or
the amount of time it will take to repay the loan. This
unregulated practice by lenders is being compared to the “global financial crash” by the
Business Editor of the Financial Times, Rana Foroohar.  As a
result, young people like my son find themselves not being able to afford to
live 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 for
all.  Consumer spending will diminish and the US economy will continue to
be substantially impacted by the increase in student debt.  Presently
default rates for school loans are at an all-time high, higher than those of
credit cards, car notes and even mortgages all due to lenders collecting from
students regardless of salary. Unfortunately, as well as troubling, this is the
only kind of debt for which this is the case. According to Donald M. Feuerstein
in the article “What Is Driving the Student-Debt Crisis?” He states,
that “Twenty-seven percent of loans in repayment are delinquent, and
most of them are expected ultimately to default, threatening hundreds of billions of dollars
in taxpayer losses and creating millions of financial basket cases for our consumer-based economy.” Yes, there are similarities to the housing bubble and
the current student loan system: both involve money easily lent to susceptible
borrowers 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 will
have to be put in place by policymakers and employers to carefully deflate the
bubble. Like the role of housing in the run-up to the global financial crash,
the value of an education is highly
overinflated, 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 interest
rates and forgave unpaid balances at maturity” were implemented without
considering what effect this would have on the economy These changes might ease
the burden temporary but will not solve the problem In fact, government funding
might 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-year
budget-scoring window, adding to the national debt without any fiscal
accountability.” Although higher education does open some doors to financial
future the average income for students once they’ve completed school has not
kept up with the rising
tuition cost. Add to this the
reduction in government support, really leave families no choice but
borrow more and more money and even though students can obtain federal student
loans fairly easy some students
have chosen to get private loans in order to complete their education not considering all
the ramifications such as variable rates, limitations on deferment etc.
that comes with going
thru a private lender. Nonetheless, as long as young people
believe that people with degrees earn more money than without they will
continue to pursue a college education regardless of the risks associated with
student 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 from
the student debt trap by considering qualifications instead of, or as important as college degrees would relieve some of the pressure currently being felt by the
economy or better yet the prevention of a total crash. Therefore, instead we need to
come 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 to
eliminate a lot of the four-year degrees to a 2-year degree, the development of
employer sponsored apprenticeship as well as a 2 year mandatory enrollment in
either 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 the
commitment made.  But we all have contributed to the impending burst,
therefore we all need to help find solutions and ensure that this does not
happen again. Parents and students need to get educated so that good decisions
can be made on behalf of the students, lenders need to be held accountable for
their carelessness in loaning money out as well as questionable lending
practices and unive