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Student Loan Debt
Earning a college degree is expected after a person graduates from high school. The higher the degree, the more money is earned. It is the goal of many to be a college graduate, however, the financial status of those seems to be a huge factor as to why many do not go to college or take out loans. Student loans can come from the federal government, private sources such as banks or financial institutions, or from other organizations. However, applying for a loan is the last resort when it comes to paying for college because of its negative reputation. By definition, student debt is money owed on a loan that was taken out to pay for educational expenses. Students take out loans in hopes of being able to pay them back but many find themselves in debt. The total student loan debt has reached 1.5 trillion dollars but why has it reached this level? (Friedman 2019)
Generation of Americans have been borrowing money to pay for education for a long time and hundreds of thousands are in debt because of this decision. Students are encouraged to save money for higher education but, with college tuition rates rising it decreases the possibility to cover all costs without seeking some financial assistance. The higher the degree the higher the cost will be. For advanced degrees, according to an article on GoGrid, a graduate student will no longer be eligible for the Federal Pell Grant or any need-based state financial aid. Graduate students depend on loans and/or other resources to pay for their tuition. Student loan debt occurs more with graduate students because they have fewer options to pay for such an incredibly expensive tuition when compared to undergraduate students. The disadvantage of student debt can be the possibility of the student not graduating and still having to pay the money taken out.
Politicians are aware of the student loan debt being so high but no final plan to get rid of the debt is in place. According to Cautero, the average college graduate with a bachelors degree takes just over 21 years to pay off his or her loans. This interferes with the ability to buy a home or even save up money. Millennials, baby boomers, and Generation X all have one thing in common. Student loan debt affects everyone because this is a multi-generational issue. The borrowers struggle to afford basic necessities in life, including transportation, housing, and healthcare.
It is clear that student loan debt has become a crisis that has no solution at the moment. Millions of Americans are being affected regardless of age. There has been talked about passing a bill but time and time again, the Republicans continue to refuse to have a vote set in place. However, the Obama White House passed a bill to lower student loan interest rates, saving the average undergraduate $1,500 on interest charges in the year 2013. (Lederman & Elliott 2013) Lower student loan debt obligations leave Americans with more money.
The answer as to why hasnt student loan debt has not decreased is because Republicans have blocked numerous votes on student loan refinancing. The issue is not a priority to those in the legislation. The Secretary of Education, Betsy Devos, has said that she will not commit to upholding an Obama Administration written rule to target for-profit colleges. Instead of helping students in debt, Devos Education Department is allowing debt collectors to charge borrowers exorbitant fees on top of their loan payments. (Ross 2017) The crisis is getting worse for students because of the Trump Administration. Tuition rises as well as the interest rate for these loans. To make matters worse, Trump Administration proposes the elimination of the Public Service Loan Forgiveness because of the budget plan for the 2020 fiscal year. The Public Service Loan Forgiveness Program forgives the remaining balance on Direct Loans after someone has made 120 (10 years) qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. This program was signed into law in 2007 and there have been rumors of it being shut down for budgetary purposes.
Student loans are a crushing burden to millions, especially those in the Latino and black communities that default at a higher rate than others. For many, the payments are proving unmanageable. By 2023, nearly 40 percent of borrowers are expected to default on their student loans. (Nova 2018) While borrowers are having trouble repaying, the only real winners are for-profit colleges and lenders who have taken advantage of the reduced enforcement of consumer protection by the Trump Administration. Research from The Center for American Progress (CAP), a public policy think tank, estimates 87 percent of black and 65 percent of Latino students take out federal student loans compared to 60 percent of white students. Among those who finish college, black bachelors degree holders default five times as often as white bachelors degree holders. They even default more often than white students who dont complete their degrees, the CAP study found. (Jones 2019)
Nonetheless, Republicans and Democrats are both at fault for this severe crisis. President Bill Clinton traded the privatization of Sallie Mae pushed by a Republican Congress for an increase in Pell Grants sought by Democratic members of Congress. (Ross 2017) Both parties are to blame but only one has the willingness to take on the challenge to make a change for the future generations of students.
This is a systematic problem that continues to worsen while college tuition and the cost of borrowing money are rising. It is up to those in the state and local policymakers to set a plan in place because the federal government has turned a blind eye to this crisis.
Works Cited
- Friedman, Zack. Student Loan Debt Statistics In 2019: A $1.5 Trillion Crisis. Forbes, 25 Feb. 2019, https://www.forbes.com/sites/zackfriedman/2019/02/25/student-loan-debt-statistics-2019/#7f2c694f133f.
- McWhirter, Kathy. Filing Your FAFSA for Grad School: Expert Tips and Resources . GoGrad.org, 28 Nov. 2018, https://www.gograd.org/resources/fafsa-for-grad-school/.
- Cautero, Rachel M. How Long Does It Take the Average American to Pay Off Student Loans? Thebalance.com, 25 June 2019, https://www.thebalance.com/how-long-does-it-take-to-pay-off-student-loans-4588027.
- Lederman, Josh, and Philip Elliott. Obama Signs Student Loan Bill Lowering Interest Rates. NBCNews.com, NBCUniversal News Group, 9 Aug. 2013, https://www.nbcnews.com/businessmain/obama-signs-student-loan-bill-lowering-interest-rates-6C10887330.
- Ross, Scott. Devos, Trump Make the Student Loan Crisis Worse. The Progressive, Aug. 2017, pp. 4447.
- Jones, David R. Communities of Color Hit Hardest by Student Loan Debt Crisis. The New York Amsterdam News, 24 Jan. 2019, p. 5.
- Nova, Annie. More than 1 Million People Default on Their Student Loans Each Year. CNBC, CNBC, 13 Aug. 2018, https://www.cnbc.com/2018/08/13/twenty-two-percent-of-student-loan-borrowers-fall-into-default.html.
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