The Real Price of Education

Courtesy Matson (2015), Flickr

In 2007, Sarah Robinson took it upon herself to go to the bank and apply for student loans. Sarah had a dream, she saw herself going through the next four years to receive a higher education that would set her up for the rest of her life. Sarah took her student loans and in 2011 she graduated from the University of Connecticut with a marketing degree. Sarah was on her way, she had made it through college and was ready to get a good job, buy a car, find a home, Sarah was ready to start her own life.

Unfortunately expectations don’t always match reality. Today Sarah is 27 years old. She works a low paying job in the city and waitresses on the side. She uses a beat up 2006 Honda Accord to speed from one job to the other. Sarah lives in a cramped one bedroom apartment where after working she comes back, sits down, opens her laptop to Facebook, and sees pictures of her friends getting married, moving into houses, and starting families. Why is Sarah so far behind on her dreams? Because, at the end of every month, Sarah has to fight the battle of paying back $80,000 dollars of student debt with an increasing interest rate.

Those with student loan debts quickly realize that they cannot start their lives the way they envisioned because they are being saddled with debt. They simply cannot afford to buy cars, homes, or start families. Their lives are being delayed. This could happen to anyone looking to get a better education. Friends or family members could all be victims to this national crisis.

The student loan crisis is not going away. Instead the $1 trillion dollars of student debt will most likely increase and affect more individuals if no action is taken to find a solution. We can start by lowering the cost of college tuition so borrowers will not have to borrow such high amounts from the banks. And for those who have already found themselves in the hole of student loan debt, the best solution would be to implement different programs to restructure these student loans while at the same time trying to bring interest down to a more reasonable rate. The combination of lowering tuition, interest rates, and implementing restructure programs will reduce the average student loan debt and allow graduates to start their adult lives on time.

Courtesy of Daryl Cagle, MSNBC

Today the student loan debt is somewhere around 1.2 trillion dollars. It is the second largest debt form in America behind mortgage loans. The rapid expansion in student loans is due to an increase in both the number of borrowers and the larger balances per borrower. The Federal Reserve Bank data indicate that “between 2004 and 2014, we saw a 74 percent increase in average balances and a 92 percent increase in the number of borrowers. Now there are 43 million borrowers, up from 42 million borrowers at the end of 2013, with an average balance per borrower of about $27,000” . Student loan debt will continue to grow because more people see it as a necessity to get a degree due to more employers requiring college education. Even police officers are now required to get a college degree. “College graduates earn, on average, 80 percent more than those without a college degree and are also less likely to face unemployment”.

Courtesy Federal Reserve Bank of New York

Contrary to popular belief, student loan debts affect all ages from levels of different incomes. President Obama and his wife Mitchell Obama both only paid back their student loans a few years before Obama took office. “For individuals reporting solid middle-class incomes of $50,000 to $75,000, those still paying off their student loans report home ownership rates 28 percent lower than those in the same income range who have already paid off their loans. For those currently repaying a student loan, more than 63 percent purchased a used vehicle instead of a new vehicle, and the data suggests an aggregate impact of $6.4 billion in reduced new vehicle sales annually”.

Now that it is clear that the student loan crisis is an issue that must be addressed we must look for a solution. We know there are only two major factors causing our student loan debt, an increase number of borrowers and increase in money being borrowed. We do not want to limit the number of borrowers because as a country we want more people to have college education. Correlational studies show that countries with higher college graduation rates are related to a stronger and more progressive economy. Therefor the only variable we can control would be the amount being borrowed. The best way to do that would be to reduce the price of college itself.

If we were to make college free it would allow students to earn a college degree and not be burdened in the future by student loans. Democratic presidential candidate, Bernie Sanders, intends to make tuition free at public colleges and universities. Sanders’s motto is that no student who is willing and able to go to college should be denied based on the income of their parents. To achieve this Sanders’s plan calls for an increase in government taxes and a “Robin Hood” tax on Wall Street. The tax on Wall Street looks to take small fees from investment houses, hedge funds, and other stock trades to cover free tuition costs while redistributing America’s wealth.

This plan predicts that without the price of tuition, students will be able to graduate with a degree, join the job market, and be able to afford cars, insurance, homes, and most importantly, get the education that they otherwise would not be able to afford. It almost sounds too good to be true, and many Republicans and Democrats are skeptic because of that reason alone. But countries that have already established tuition free college, such as Denmark, Finland, Germany, Sweden, Norway, and France, have shown that it is possible and could very well work in the U.S.

Hillary Clinton shares the same goal of lowering the price of college as Sanders, yet her plan is a little more obtainable. She was quoted saying, “Now, I’m a little different from those who say free college for everybody. I am not in favor of making college free for Donald Trump’s kids. I am in favor of making college free for your grandson by having no debt tuition.” Clinton’s goal is to allow students to attend state colleges without taking out loans to pay for tuition.

This plan would require providing federal grants to states, assuming they are on board with investing in higher education. $175 billion in federal grants would guarantee students would be able to attend their public universities within their states without being forced to take out student loans. Along with the federal grants, this plan would require the families make realistic contribution towards the tuition, which would be determined based on family income. This course of action accomplishes getting the price of college tuition down and affordable for families and students pursuing a higher education without having to worry about student loan debt.

Courtesy of Blake Neff, Mother Jones

Whatever strategy you prefer, the overall message is that tuition prices must be lowered. But what can be done to save those who have a combined 1.2 trillion dollar debt? Politicians have brought up the idea that there should be programs that cap borrowers loan payments at 10% of their income and forgive outstanding debt after 20 years of payment. This would be a great relief to those who have had outstanding debt and are beyond 30 years old. The second part to help those struggling to pay their student loans is to allow them to restructure their loans to the current interest rates of 4.29%. Doing this would allow 25 million undergraduates to save at least $2,000 during the remainder of their loans.

Courtesy of Joe Brusky, Flickr

In conclusion, student loan debt is proven to be one of the biggest concerns for us as a nation, and the time to act upon it is now. Right now we hold the power to elect individuals who can take the proper steps to lower tuition costs, interest rates and allow restructuring of loans. We can make a difference for our friends and families who are being limited by long lasting loans. Every accomplishment starts with the decision to try.