The College Debt Crisis
Graduating college and entering the world is a beginning of a new chapter in a person’s life, but for most graduates it comes with a overshadowing monster that most struggle with: student loan debt. In 2003, the student loan debt totaled around $240 billion, while today it stands at an outrageous number of $1.2 trillion. In 2010, students and parents took out loans that totaled $100 billion. In one year! In 2012, outstanding student loan debts exceeded 1 trillion dollars according to The Federal Reserve Bank of New York, which is only second to the mortgage debt. Last year, according to Market Watch, 2015 graduates left school with an average debt of $35,051. Towering tuition costs are preventing more and more students from receiving a college education.
The debt a person faces from paying for college could haunt them for decades. Maybe soon a degree will not be worth the investment of the loan. If tuition costs continue you rise in this fashion, paying for college will become impossible. Will people just stop going to college? To prevent this from happening, community college should be made completely free, and it is important that we focus on making student loans more affordable to students. If so, then the average student debt would decrease each year. Pell Grants should be awarded to students more frequently. Finally, we should educate students and young people in general to understand what debt is and how it can affect their futures.
How bad is this problem really?
Kelley Holland of CNBC argues that the national student loan debt crisis is really not as bad a problem as it seems. Her main argument is that people who are in debt are those who have the ability to pay it off easily. I’d like to point out that financial aid given to students generally not increased, making it harder to attend college due to increasing tuition prices. If more students are attending college, then more financial aid is necessary for balance.
This problem does not just affect low-income families. According to the study, the top quarter of the country financially holds about 40 percent of the total debt. Although these students are probably looking at a more comfortable income, they are probably much deeper in debt and will be paying it off for much longer. With tuition prices rising exponentially and average household income totals remaining at a constant level, we can see that this problem will only continue to get worse and worse for everyone.
What can we do about this?
Community college must be made free for every citizen. Federal officials can learn a lot from what some states are already doing. Tennessee has already taken the initiative to propose free community college. Oregon is experimentally new options that allow students to have the option to attend a state college tuition-free and simply pay the state a small percentage of their income for a specific amount of time after graduation. Although this solution would not be ideal for those seeking to attend a 4 year college.
Martin O’Malley, the previous governor of Maryland, believes that if we cap the monthly payments of student loans, then those who want to pursue a lower paying career will have an easier time of paying off their loan. There are programs like this in place, but not enough. He argues that a better policy would be making these programs automatic, then let students opt out if they want to.
Another possible solution is for the government to increase the amounts of Pell Grants, “which are the leading source of student aid for low-income families.” The U.S. federal government gives Pell Grants to students with extreme financial need. By directing more focus to funding of aid for students, their loans totals could be cut significantly down. Pell Grants are crucial to helping students pay for college and receive an education, but recently there have been shortfalls in the money available to be awarded, due to the large number of students who are starting to return to school for a graduate education, along with other factors.
Yeseul Choi of the university of Wisconsin believes that students typically treat their education as an investment, downplaying the reality of debt. This is more of a problem for parents though. A typical college student cannot really grasp the idea how much $40,000 in debt really is, and the struggle they might have paying it off. That itself is a problem and can be solved through simple education. High schools should require every student to take a financial literacy course.
When a student is deciding where to go to school, or even if to go to school at all, their main focus should not be whether or not if they can afford it. This is unacceptable. Education should be something that every person receives, no matter his or her economic status. Going to college is basically essential in our day and age, but it is becoming unaffordable for some people. This is a problem that should be a top priority of solving. Although, solving a crisis this large will take a combination of many solutions to have an impact.