Student Loan Debt

This report examines the increasing trends in the amount of debt students are graduating with. The purpose of this report is to prove why these trends need to be stopped, and how they can be stopped. After viewing the statistics from 1993 to the present it will be obvious that student debt is not rising at a steady pace, but that its growth is leading to large financial burdens by many students. Recommendations are given about the actions that can be taken by not only students, but everyone to help improve this dire situation. The changes that student loans have been through over the last couple of years will have a lasting effect on current students, prospective students, parents, and those who have graduated and

“Ensuring quality higher education is one of the most important things we can do for our future generations” (Ron Lewis). There are more students enrolling in post-secondary schools than ever before and consequently there are more students acquiring large debts. Once a student graduates, they enter a $33,000 or more student loan debt (Students Loan Resources). These student loans continue to place graduates into large debts, which is largely caused by their lack of knowledge of available resources, and this impacts their everyday lives and future generations.

Student debt is a topic that generates a lot of debates. From politicians to lenders to students, everyone has an opinion on the topic. With a trillion dollar national debt, it’s not surprising why the topic is such a huge issue and the solutions are even greater. The student debt is a form of debt that is owed when a student has completed college or drop out. The average interest rates for the ungraduated and graduated are 4.45% to 6% (Quadlin). To pay off all the students’ debt, it will take 10-25 years to complete it. College students will have at least six months before they have to make the first payment. Student debts can be a real problem for those who aren’t preparing for them. Student loans debt should have a longer grace period, lower monthly payments and repayment programs that apply to all because students will be able to manage and repay their debts in a timely manner.

A problem with student loan debt is that students gain more debt because they are not able to pay off the student loans within the given time which also causes them to put certain life decisions on hold. According to Sophie Quinton debt is a problem for the recent college graduates because “There’s currently no way to get rid of federal student debt other than paying off the loans. while some borrowers are paying off their debts just fine, overall they are adding debt faster than they are shedding it”(Quinton). According to Jamaal Abdul-Alim stated that a “survey - titled Student Loan Debt: Who’s Paying the Price?- revealed a number of troubling statistics about the practical ways that student loans are impacting college graduates in their everyday lives. For instance the survey found that: 49

Problems in the student loan market are not just harming students but are also exacerbating problems with the United States’ recovery from the Great Recession. New York Federal Reserve Bank data has found that outstanding student debt topped $1 trillion in the third quarter of 2013, and the share of loans delinquent 90 days or more rose to 11.8 percent. Furthermore, the share of 25-year-old Americans with student debt increased to 43 percent in 2012 from 25 percent in 2003, while the average loan balance rose 91 percent, to $20,326 from $10,649 (Gage and Lorin). More than 40 million Americans are in student loan debt and because of this, more than 40 million Americans are not able to stimulate the economy as they are not able to buy houses or cars, or start businesses or families (Applebaum). In Wisconsin alone, student loan debt has resulted in a loss of over $200 million annually from new car purchases, while also resulting in middle class households with student loan debt overwhelmingly renting homes instead of owning them (Vanegeren).

Today, the number of people who have borrowed money to pay their expenses for college, has been rising. In addition, colleges have been increasing the amount charged on students who receive an education. An article states that “tuition is increasing at a rate double that of inflation”, for this reason, the amount of money a student has to pay back has been increasing (Webley). According to the article “Even if you don't have student loans, you should want them to be forgiven”, the author, Lisa Schmeiser, states that “Approximately 44 million people in the U.S. have borrowed for student loans... debt standing at approximately $1.3 trillion today”.

Not only does the increasing cost of attending college affect a student, but unemployment rates also cause the student’s debt to continue longer than it should. Recently the unemployment rate in America has gone up dramatically, due to the economy crash. As of January 2008, the unemployment rate started increasing, starting at 5% unemployment, and in 2010, the unemployment rate was up to 9.8% (“Database”).

College is a big obstacle for students because not everyone has enough financial support going through college. In his article, “Is College Tuition Really That High?” Adam Davidson discusses that the average student does not receive enough financial aid. Education is one of the most efficient ways to becoming successful and learning more about the world they live in. These days, students entering college do not receive enough financial aid to pay off tuition due to the increases in tuition and reduction in financial aid.

Here in the United States, there are many forms of consumer debt, which help contribute to the large sums of debt countless Americans find themselves faced with. Directly effecting many college students is student loan debt. Student loan debt is now the second largest form of consumer debt behind housing” declares the Federal Reserve Bank of New York (Grisales). This is due to the fact that student loan debt grew 7.1% in 2014 to $1.2 trillion (Grisales). If this statistic alone is not worrisome this next one is sure to be. The amount of debt in the housing market that helped to spark the last recession was only $1.3 trillion (Grisales). Due to the increased amount of debt required by students to attend college many students are feeling the wrath. According to the U.S. Census Bureau, “In 2014, 11.7 percent of females and 17.7 percent of males between the ages 25 and 34 were living with their parents” (Grisales). The fear of obtaining massive amounts of debt is driving the current generation of student’s to put off many future hopes and dreams. While causing them to move back home to save money. The current student loan crisis is crippling the economy and ruining the lives of American students.

In the United States, it is generally accepted that college (or any form of higher education for that matter) is a wise investment that each and every individual should strive for. Each and every year thousands of parents open college funds and future investment plans to ensure that once their child is of age he or she can participate in quality educational programs. While college attendance rates are at a positive all-time high, right behind it follows an astounding $1.3 trillion dollars in student loan debt. Let’s face it, college is expensive, and it’s only getting worse. Could the outstanding quantity of student loan debt be the next national crisis?

In the article, “Student Loan Debt 101” by Indiana University, shows how many students are graduating college with a diploma, however they have a significant amount of student loan debt. Students, such as high schools seniors or even college freshman are not taking into consideration the importance of student load debt. People would think that these freshman in college would have thought about this concern thoroughly but when they indeed do not. Indiana University has created a few ways that this issue could be addressed.

Attention Getter: Of the 20 surveys that were completed 17 of us (or 85%) said that us students are actually worried about paying off student loans once our schooling is completed.

As Young teenagers become adults and start College, one issue that doesn’t seem as a big deal at the moment for many students are student loans. Young college students who don’t have the money, don’t have enough scholarship money, or family who doesn’t have the money to pay, will apply for student loans each year. They amount the student receives can vary depending on the college and what the student has achieved academically. Though interest rates are low with subsidized being 4.29% and unsubsidized being 5.84% ("Federal Student Aid" Interest rates and Fees), student loans still have a huge effect on college students once they graduate. One college graduate’s story helps explain the struggles for most students:

Facing a seemingly massive debt can create a scare tactic to continue on a path toward a higher and exceptional education. Although there are controllable factors to help lessen the weight of student debt it creates a wall of challenges toward furthering ones education, because of the fear of falling into a seemingly large debt Canadian students are afraid to maximize their education, prohibiting Canada to create and maintain a stronger and more skilled work force.

College students usually do not understand that there should be a budget set between the things we want and the things we need. Today I will be informing you how to save money so that you are able to save money throughout your college lives. ( thesis and purpose statement)