Reasons to Eliminate Student Loans
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The total amount of student college loan debt has been on the rise in the recent past. In every research done in America, it seems that the statistics on student loan debts are worse than the last. In the US today, attaining a college degree is the most fundamental qualification for getting a skilled job employment opportunity. The present young generation wants white-collar jobs because they attract higher pay.
Employers expect job candidates to have a primary qualification of at least a Bachelor’s degree for any entry into the job market, but the cost of tuition has continued to rise. To achieve their childhood, family and society expectations, many students have resulted in applying for student loans. A student loan is a very intricate issue in the current economy. There are many players involved in increasing student loans (Mason 39).
These players encourage students to go to college and get a loan then end up with significant loans to buyback. Private players, state government and federal government are always on campaigns encouraging students to pursue education because it is the only way to get well-paying jobs. The federal government promises student loans that attract lower interests compared to private or bank loans. However, many students still find it hard when it comes to repaying these loans. The federal government offers four types of loans.
The federal direct loan forms the largest student loan program in America. Under this program, the U.S. Department of Education functions as the financier. In this program, students are given direct subsidized loans, direct unsubsidized loans, and direct plus loans or direct consolidation loans. Each of these loan packages promises students to aid them to complete their higher education (Gradeless 56).
In the past, a college education was affordable to many, and it was a guarantee for a higher standard of living. Today, going to college and being guaranteed a high standard of living is a daydream to many. In the current economic downturn, many Americans are finding themselves laid off, and the need to go back to school intensifies. Many do this with the aim of remaining relevant in the 21st-century job market. As more and more Americans are joining higher education programs, and are succeeding in getting financial aid, the already under-serving economic aid system is further stained. The decline in support for higher education has been felt both at the state and federal level. Every year, many students fight tooth and nail on both federal and state levels to ensure that the government commits more funds to support higher education (United States Student Association Education).
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Many of the elected officials always promise to invest in education during their campaign trail. However, they maintain silence when education budgets get slashed resulting in tuition fees skyrocketing and financial aid decreasing. Since the early 1980s, tuition fees in many colleges have increased by over 500%. A project aimed at determining the student debt in America showed that the average college senior who graduated in 2010 had $25,000 as an outstanding loan.
This has resulted in loan debt for the student to stand at $1 trillion. The gap between tuition fees and the total amount available has worsened the situation felt by many students. It has made the current students become indebted. Additionally, the current generation of students has been left jobless after graduation something that makes many students unable to pay their loans (Gradeless 21).
The number of Americans who want to attain a college degree is getting higher and higher every year. According to the National Panel Report, approximately 75% of students currently in high school reported that they would like to join college after graduating from high school. Those from a humble background said that they would go to the extent of getting a loan from any agency to get through college. Additionally, adults who mostly get laid off reported that they would like to go back to school to get a degree so as to continue their professional development.
Policymakers, employers and families’ put pressure on students and breadwinners to get into college because it is an unavoidable choice that will enable them to survive in the current society. This is regardless of the high cost of college fees as students are promised loans, which they end up paying dearly. Most students end up depending on some forms of financial aid. Realistically, getting a scholarship in the U.S. today is very challenging, because of increased competition.
As an alternative, most students turn to student loans as an easier way to get the necessary tuition. What many students do not realize is that most students forget that financial aid is indeed a loan. This means that this money earns interest and must be returned. Approximately, 20 million American students attend college every year. Out of the 20 million students, around 12 million, which is approximately 60%, borrow every year to help cover their college fees (Scott).
The Federal Reserve Board of New York reported that the outstanding student loan borrowers stood at 37 million. In 2012, students who took loans under the age 30 were 14 million, those aged 30-39 were 10.6 million, 5.7 million were aged 40-49, 4.6 million were aged 50-59 and, finally, those aged above 60 were 2.2 million. As a result of huge student loan debts, many American families continue to face a lot of stress. The cost of daily living has increased, yet many students who have benefited from either private or federal loans cannot maintain comfortable lifestyles (Collinge 76).
Today two-thirds of students graduating from American universities and colleges have substantial amounts of debts. Institute for College Access (TICAS) reports that an average student borrower in the US graduates with an approximately $26,000 loan debt. On the extreme, there have been reports that some students have graduated with crippling debts of $100,000 or even more. What is astonishing is that this is just a case of only 1% of graduates, because the majority of graduates accumulate more than $40,000.
This is a negative game for both the students and the economy. Student loan debt has been ranked second after mortgages. The question that many begs to ask are whether financial aid to the student should help students or should it enrich some people. The federal debt stands at $16.7 trillion while student loan contributes to 6% of this debt. Although the government has tried to bring into force some laws such as the Student Loan Fairness Act, loan debt for many students remains high (Mason 67).
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Wealth results what a person owns minus all liabilities, yet the amount of wealth in many families that have taken student loans continues to decline. One of the considerations that every student is made aware of is that he or she should start paying on the agreed date. In the minds of many students, they see themselves getting employed immediately after graduating. However, the bitter truth is that the majority remain unemployed. Therefore, many concerns come forward with respect to a college education.
One of these issues is whether a college education is even affordable. The most significant problem that faces many graduate and their families are the intricacies of paying the ever-rising tuition fees. In an effort to come up with a solution to this threat, the federal government has come up with various actions to control the rapidly rising higher education cost and loan debt. The united president is not of the idea that colleges and universities should lower their tuition fees. Instead, the president wants to raise higher education funds mostly through federal loan programs. This is not well-timed as the current student loan debt stands at over $1 trillion (Gradeless 23).
Whether a student in the U.S. may be seeking to reside “in-state” or go out, the current college fee is still high and private firms, banks, State and federal governments continue to give loans. To attend a four-year college degree, it will cost a student approximately $9,000 for ‘in-state’ residents. The amount for non-residents needs to pay is approximately $27,000. Although the financial aid sounds to be a superior plan, it causes college students who take these loans to pay back the amount in their later life and even have a large sum of debt.
According to USSA, student debt has continued to grow throughout the Great Recession in the year 2012. Student loan debt now averages approximately $27,000 for every student who is graduating currently in America. Additionally, as student loan defaults and student debt continue to escalate; private student loan lenders continue to increase their profit margins such as Sallie Mae, which tops the list of student loan lenders (United States Student Association Education).
Loan debt has even penetrated community colleges. In the year 2008, 38% of students graduating from community colleges had debts. The Student Loan Fairness Act lowered loan rates from 6.8% to 3.8%. However, working with an average loan debt of $26,600 and compounding for interest year over year using the 10-year payback plan, a total cost of $26,600 loan will be $38,600. If this is broken down to monthly payments, $320 will go towards student loan repayment and continue making students' life after graduating very hard (H.R.1330-Student Loan Fairness Act).