Ever wonder is college even
worth it? Everyone,
if not talking about it, has at least heard about the student loan crisis and
the negative effect it’s 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, 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.” Individual cost for a college
education keeps climbing higher and higher while Financial assistance has
declined by 26 percent from the mid 1990’s. 
“The average
annual fee for a public college in the US is now $9,700, while private Ivy
League institutions command massive sums of almost $70,000. This is in a
country where the median annual salary is $50,000.”

 

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 on 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 to
Washington a 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.”

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Unless the current condition is dealt with, the US will be
left with many young people crippled by a debt they are probably not going to
be able to pay back, which will result in a depleted economy.

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. 

The
article goes on to say that 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 lending system that is 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 regulated practice from
the 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 they end up moving back home with parents. 
Even worse, the ripple effects this would have on the economy should
cause concern for all.  Consumer spending
will diminish. The US economy is being 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 “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.

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 institutional spending up, shifting the
burden over to the tax payer “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 to
the reduction in government support, really leave families no choice but borrow
more and more money.

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

The article 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 the economy is currently feeling 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 2-year degrees,
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 universities need to reform
tuition cost.

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