The Student Loan Crisis

 Mary Elsaid

Professor Greer

College Composition II

18 September 2018

The Student Loan Crisis

It is a norm and expectation in society today for students to pursue higher education after graduating from high school. College tuition is on the rise, and a lot of students have difficulty paying for their tuition. According to 2016 statistics from the U.S. Department of Education, “More than 20.5 million students are enrolled in college, and the average college tuition cost ranges from $4.910 for an in-state university to $32.410 for private schools, and college gets more expensive every year” (Bill Fay). To pay for their tuition, most students have to take out loans and at the end of four years, those students end up in debt.  The student loan crisis affects so many people after graduating from college, and having difficulties finding jobs in their career fields, so they have difficulties paying off their student loan. Because student debt is an almost impossible burden to overcome, America needs to reconstruct student loan programme.

 Most of the people in this country want to earn a degree to achieve their goals and to get a better position in society, but they are afraid of this debt problem that faces each one after finishing college. Also, a lot of people think about education to solve life’s problems because without a higher education people cannot get better jobs. More people were encouraged to go to college to have a good position to avoid the low income, but they incurred financial debt. The reason is that student loans have become a burden that affect the economy too. According to Gross (2012), “Student Debt Crisis has grown for all income groups, but it is a greater burden for the lowest-income and least-wealthy households” (Gross). For example, if there are people who have low incomes, and they want to get higher education, they will see an increase in the proportion of annual income, but the student loans must be repaid. This crisis will affect women and men which means that they pay almost paychecks towards their debt that making them unable to support themselves.

With the debt loan rapidly increasing, it is not only affecting the students but the economy as well. As stated in “6 Ways Your Student Debt Ultimately Hurts (and Helps) the Economy”, “Many student loan borrowers choose to spend less. Or, they can’t afford to spend on items they otherwise feel ready to buy” (Kirkham). This article says that many students can’t afford to buy something they would like to buy because they must repay the loan. For instance, there are many students who cannot purchase a new car or a new house in order to save money for the student loan and to repay it. This affects the economy because when people pay for goods and service or spend money, that keeps the economy running and growing. This reduced spending will lower revenue and profits. Bill Fay observed that “Students have over $1 Trillion in debt, and it’s added to the other U.S debts like car loans, housing and more” (Bill Fay). Furthermore, the student loan crisis also causes problems such as unemployment. For example, those without higher education face unemployment rates and lower earnings which means lower income, so this crisis can affect the economy because of unemployment. If there are more jobs, that means that there are taxes and money going back into the economy and government.

One reason for the student loan crisis is that loans for education became one of the lucrative sectors of the financial industry. Andrew Ross points out, “Unlike almost any other kind of debt, student loans cannot be discharged through bankruptcy, and, over time, collection agencies have been granted extraordinary powers to extract payments, including the right to garnish wages, tax returns, and social security” (Andrew).  That means that the rates and returns are much higher for the private sector.

To solve the student loan problem, many ideas have surfaced. People everywhere have their own opinion towards the solution to the student loan crisis.  The student loan crisis has to be fixed to support the student, and to encourage the education. Moreover, when we find a solution for this crisis, our country will be better. The country has a big challenge to fix this issue. What should the country do to decrease this crisis?  There are many solutions to fix this crisis. First, all the students should be assisted by decreasing tuitions and decreasing the need for private loans. The private student loans typically carry higher interest rates, so it has to be decreased. “In 1973 if a student wanted to attend a private university, he or she would expect to pay about $10,783 opposed to a public school at $2,730(Tuition and Fee). And in 2013-14 the cost of a four-year private school was $30,094, and $8,893” (Andrew). College tuition rates must be lowered because the cost of college and tuition become has more expensive every year. As Briana Boyington said “In-state tuition and fees at public National Universities have grown the most, increasing 243 percent” (Boyington). If the college tuition is free, the student will not be worried about paying for it, so they don’t have to take aut a loan. Finally, the student loan crisis will be fixed if the students have financial resources and scholarships instead of depending on loans exclusively.

Beauchamp, Brenda and Jason R. Cooper state that there are efforts being sought to make the Bankruptcy code treat student debt issues in the U.S by making some loans dischargeable in bankruptcy; This would help the student loan crisis. “The Bankruptcy Code’s unwavering treatment of student loan debt has come under scrutiny, as many search high and low for aide in what many proclaim to be the next fiscal crisis” ( Beauchamp, Brenda and Jason R. Cooper). The authors mention proposed changes to the Bankruptcy Code in relation to the student loan crisis. The bankruptcy process is provided to achieve two objectives: “Provide a fresh start for the debtor through the allowed discharge of personal or legal liability on their dischargeable debts, and (2) repayment of creditors of equal priority, known as “equality of distribution” (Beauchamp, Brenda and Jason R. Cooper). Bankruptcy Code should be changed to help the students in treatment of the student loan crisis, so most of the student loan borrowers may look to file Bankruptcy for relief in the future.