Student Loan Debt

Higher education is supposed to be a time in one’s life that is fun and is full of many memories, but in the United States the increasing cost and shrinking job market is showing the financial problems that arise in achieving a higher level of education. The increasing cost of college is putting into doubt the rate of return a degree will give in the future. In recent years, the amount of student loan debt has dramatically increased with a current total standing at $1.4 trillion owed in student loans by approximately 44 million Americans. Although, there currently are many programs that have been implemented to relieve the financial burden that students are facing in repaying their loans, it seems as if matters are getting worse and there hasn’t been an effective solution to ease off the problem. Student loan debt is increasing at a rapid pace, it has a profound effect in the lives of students before and after graduation, and makes high school graduates wonder if higher education is the true key to success.
Many high school graduates dream of attending a college or university, especially if they get into their “dream school,” many don’t even think about it once they get accepted into such school. They are driven by the emotion they feel to attend the college of their dreams, without taking into account the financial implications that come along in attending such school. Majority of families that will have a son or daughter attend a college are not aware of the cost associated with such decision, only when the moment comes is when they begin to worry about the finances. Having a couple of months to line up the financing for a college education is not the best or brightest idea because many families don’t make the most rational financial decisions under pressure. This is a major problem not to have our students and their parents aware of the basic finances behind student loans or funding an education at all. The process of financing education could be made less stressful with simply raising awareness because it allows families to plan ahead of time. Lack of information is not the case for all students and their families, but still many assume that they will get a good stable job that will provide enough for the payment of loans, but is this really the case.
Current college students are going through more difficult times than past college generations. In recent years a college degree no longer has the same effect of giving financial stability it once gave graduates, it no longer means that you will have a job that will provide financial security. Many graduates are able to find a job, but not one that matches their degree or credentials, it has become the new norm for the new generation to take on jobs and positions that are not meant for their degree. This is known as underemployment, due to the shrinking job market in the U.S, where there are more college graduates than jobs available. If there are no well paying jobs and graduates are forced to be underemployed, it just begs the question of ‘How will they pay their student loans?’ if wages continue to be stagnant and the job market keeps shrinking it will take many years to pay off the loans which is why debt follows them in the future and delays life milestones. It prevents graduates from making purchases that will strengthen the economy because they are so drowned in debt that they don’t want more. It also has a significant toll on how early graduates will save for retirement and how much they will end up saving for retirement. These factors influence the decisions that some high school students make regarding their educational future. Some may decide not to go to college because of all the potential problems that may arise if they go to college or they are forced to downscale on their college of choice to a more affordable option. The situation our young college generation is facing is indeed absurd, how did we get to the point where a college education was once affordable and accessible to all, to unaffordable and inaccessible to many.
The $1.4 trillion student loan debt is higher than auto loan debt and credit card debt. The cost of college has outpaced inflation, if the cost of college would have increased at the same rate as inflation we would see that tuition would be relatively cheaper than it presently is. Taking out student loans for college has become the new norm in America’s educational system. This dramatic increase in tuition has to do with the amount of money colleges decide to put into the school to keep the campus nice and beautiful to compete with other schools to attract potential students. The schools need not to take all the blame for the increase in tuition prices, the government has not done such an exemplary job in maintaining tuition at an affordable cost. Student loan debt has been allowed to sum up to astronomical levels and this shows that this is a major problem that could lead to damaging consequences in the United States economy if no immediate action is taken.
Some people view the student loan debt of $1.4 trillion as a minor problem because most of these loans are covered by the United States government . The government loans seem to be the best alternative for those students that need to finance their education because of the favoring conditions it gives students on fixed interest rates, repayment programs, and more. Considering that the $1.4 trillion adds up to around 7.5% of the country’s GDP it is still seen with leniency because majority of these loans are not being held by private institutions, which in said case if the students were to default would have a significant impact in the U.S economy. In essence the people that are putting their money on the line are the U.S taxpayers, that are acting as the creditors towards these student loans. Is there really any sense in saying that these loans are safe if a massive wave of default on student loans were to come the U.S taxpayers will have to carry on with the bill. Nothing is ever too good to be true because student loans backed by U.S government can be considered to be a “double-edged sword.”
Student loan debt is rising at a quick pace to dangerous levels, which makes us think if we are currently going through a bubble that could burst. Many analysts and experts believe that we are in a student loan debt bubble because of the similarities that are being seen from the 2008 subprime mortgage crisis such as delayed life milestones and reduced consumer spending. Although, we have not yet reached the breaking point the problem seems to be getting out of control as time goes on. There is currently a substantial amount of pressure towards members of congress to pass a financial reform, but even with efforts and creativity there has not been a solution that would be realistic or favorable for all.
With yet no plausible solution to eradicate a $1.4 trillion problem it will continue to affect the lives of many students and graduates. An individual's race, level of education, and class position doesn’t matter and they usually have the same belief that college is too expensive. Colleges will try to defend their name by saying that students will never pay the full cost of attending a college because of loans and grants. Students still end up thousands upon thousands in debt, which just inflate the so called bubble more and more. As the rise in prices keeps skyrocketing it’s like if we will never see the end, but things never last forever because the economic changes student loan debt causes will at some time show their effects whether it be in the near or distant future.