Post College Debt Must Be Addressed
Forty million American students now have a black cloud of student loan debt hanging over their heads adding up to a devastating 1.2 trillion dollars. Is the future of higher education in trouble?
With obtaining a college education the standard of living is increased, unfortunately, many United States citizens’ are now limited to the education they can receive due to the overbearing cost of tuition in which most people can only afford through student loans. Taking out student loans is driving people deeper in debt, in fact, the average student debt figure has doubled in the last 20 years from $15,000 to $30,000.
For the average college student it usually takes a ten year repayment plan to get rid of this college debt. Thomas Bright highlights the dangers of student loans stating, “private student loans are already harder to pay due to higher interest rates, and when consumers fall behind they have no program or resource to help them re-establish their footing”. In fact, students in the 90th percentile of student debt (extreme cases) face a frightening debt crisis of about $50,000 before interest, financially haunting them deep into their careers.
If tuition continues this uptrend then by 2030 tuition for public institutions will cost $41,000 to $50,000 which is more than the most expensive private school today. Figures this high draw questions of concern regarding the change higher education will make in ten years. If nothing is done about the rising tuition crisis then the cost will become impossible to pay for more parents and students down the road and the debt figures will continue to rise as graduates enter the workforce.
So why is college so expensive now? Sandy Baum of the Urban Insititute explains, “it’s not that colleges are spending more money to educate students; It’s that they have to get that money from someplace to replace state funding”. The government reallocating their money to other funding such as military spending which is now around 2 times higher than in 1960. Is our government allocating our nation’s funds in the right places? The answer is politically open for discussion with many varying opinions, although, it is tough to argue that we should not address more attention to the high cost of college. This government spending is the true cause of so many graduates’ financial issues.
The Real Effects
Ultimately, this affects living standards after college. After graduating college the list of costs is endless from car payments, housing, insurance, living costs, etc. The average starting salary with a bachelor’s degree is about $45,000 according to the NACE’s survey which just puts a dent in this laundry list of costs. People are now not only forced to make constant payments on their student debt, but will most likely have to take out multiple loans for other payments. Also, college does not guarantee everyone a job as 12.3% of college graduates under the age of 25 are unemployed. These unemployed graduates are now in a financial crisis to start their careers facing student debt loans and living expenses with no source of income to pay for these.
In my mind, Bernie Sanders’ has come up with the most reliable solution to curing this crisis entailing many financial maneuvers regarding the federal government making public college and universities’ tuition free. At first the sound of this idea it seems quite impossible to accomplish due to society’s blinded view of the experiential cost of college driving so many people into debt, but it is not a radical idea. The idea is complicated, although, not revolutionary as Sanders further explains that “Germany eliminated tuition because they believed that charging students $1,300 per year was discouraging Germans from going to college”. German college graduates enter the work force without a black cloud of debt over their head unlike American graduates. This plan even offers financial aid for students that are unable to afford other expenses such as room and board or books.
The second part of the solution involves cutting the student loan interest rates. This implementation will prevent graduates from incurring more financial burden with their debt continuing to grow overtime. Sander’s claims, “Interest rates on undergraduate loans would drop from 4.29% to just 2.37%”. This drop is truly significant, about a 50% decrease, which helps people get on their feet more quickly after graduating. Citizens would even be able to refinance their loans at the new interest rates, so current graduates could seek benefit rather than current students specifically.
How would these seemingly magical plans by Bernie Sanders be paid for? Further explaining the Wall Street plan Sander’s answers this question in his current campaign stating,
“The cost of this $75 billion a year plan is fully paid for by imposing a tax of a fraction of a percent on Wall Street speculators who nearly destroyed the economy seven years ago”.
Many other countries such as Britain, Germany, France, and more have a more expensive tax system that funds the free tuition, proving that his plans can be accomplished. College in these countries is viewed more as a public benefit rather than a private product or commodity like in America.
As a current college student, I have been directly affected taking out student loans as well as almost all of my fellow classmates. Not to mention, I have seen many future college students base their decision based off of cost rather than preference. Regardless of if Sanders’ plan is applied he still has drawn awareness to solving this financial disaster.