RIP Future: The Curious Case of Mounting Student Debt
A look at student loan debt that is suffocating the lives of millennials all over the world.
Need money for college.
Need college for job.
Need job for money.
While this unending loop of viciousness continues to trouble students all over the world, the issue of student debt and related problems need to be addressed very seriously.
What made millions of students wonder if college is worth the debt?
How did going to college ruin the lives of millions of people across the globe?
When did student loan debts become the crippling side effect of quality education?
Here are 5 cases of student loan debt from various countries to give you an insight on the seriousness of this issue.
1. UK
Student loan debt in the UK rose to more than £100 billion for the first time in the year 2017. In England, the average amount of debt for each graduate is £32,220.
This is Grace Parkins.
Student Debt: £69,000
Parkins, 25, graduated from the University of Westminster in 2016 and now works for a PR firm in Leeds. She was one of the first generation of students to enroll on a tuition fee of £9,000 per year. All she knew while signing up for the loan was that she’ll start repaying it when she starts to earn £21,000 and that her outstanding debt would be written off after 30 years. After four years of college, she was shocked to discover that she was then more than £69,000 in debt. What she did not know was that she was that £8,000 of interest was piling up on her while she still at university.
2. USA
At $1.4 trillion, America’s pile of student loan debt is near-incomprehensible. Most research on student debt examines default rates three to five years from when repayment begins, arriving at an average default rate of 11.2%. Studies show that default rates could rise as high :as 40% by 2023.
Emilie Scott from USA says, “ I went to college and in turn, accrued about $70,000 in student loans both private and public. I went to school to become a teacher. I worked four jobs in college to alleviate how much I needed to take out in loans. It has since been four years that I graduated and after paying $600 a month every month for four years, that adds up to around $28,800 I have paid towards my loan. My current balance is now $65,000. Because of interest rates that are close to 10% on several of my loans, my near $30,000 I have paid back results in as 5,000.”
3. Canada
Tuition to a Canadian university costs an average of $6,571 per year with higher average annual costs of programs like dentistry($22,297), law( $13,642) and engineering ( $8,099). In Ontario, those under the age of 30 now make up 14% of insolvent debtors in the province, out of which one-third carry student debt,according to a survey conducted by a local insolvency trustee firm.
Here’s what Iain Reeve, a 34- year old Vancouver researcher at a private sector union has to face because of his multiple degrees. When Mr. Reeve graduated in the summer of 2014, he faced the repayment of an $80,000 student loan — the cumulative effect of an undergraduate degree, an MA and a PhD. Having received some interest relief on the loan, his loan reduced to $70,000 but the $750 to $900 monthly payment has taken a hard toll on his budget.
The average debt among those reporting any debt is $26,819 with 29% of all students reporting a debt of $20,000 or higher.
4. Sweden
College in Sweden is free. But students still end up with a lot of debt. Even when college is free, almost 85% of Swedish students graduate with debt. Also, new Swedish graduates have the highest debt-to-income ratios of any group of students in the developed world — almost 80%.
It is important to understand that cost of living including accommodation, food, rent are very high in Sweden. So, even though students do not pay college tuition, most of them can’t afford housing. There begins the tryst with student loans.
5. Australia
Australia has prided itself on having one of the most generous student loan programmes in the world, but facts have been questioning this claim lately.
The total amount of outstanding student debt in Australia hit A$54 billion (£30 billion) in June 2017, with about 14,000 people owing more than A$100,000. The number of people having student debts has risen by 70 per cent since 2007. It is also worrying that the number with debts well over A$100,000 has grown sevenfold.
An Australian Parliamentary Library report which summarised the data, suggests that thousands of graduates are having trouble coping with their humongous debts. The report also estimates that about 25 percent of the outstanding debt will be never be repaid.
Food for Thought
Education is serious business (sigh, the irony) when it comes to landing a worthwhile job that lets you earn well. While good education and a college degree are must-haves in this highly competitive job market, the burden of a student loan is just not acceptable.
In India, as The Wire reports (in 2017), there are two facts to be considered. One, Indian banks saw a 142% increase in student loan defaults during a period of just over three years from 2013 to 2016. Two, the Indian higher education system is broken and hundreds of thousands of jobless graduates enter the job market every year.
It’s true that more students go to colleges today than before, and this could have contributed to the increase in loan stats. Loan defaults in India can be partially attributed to first-generation low-income students who are likely to borrow with “unrealistic expectations about job opportunities in future”. The sad part is that a degree from most institutions in the country are bound to leave them unemployed or at best underemployed. A vicious circle of loan default ensues.
Student loan debt is a huge problem; it’s like a wall that blocks out all view of the future, leaving little sunshine, little hope for better things. And before it balloons into unimaginable proportions of the likes of USA and UK, we need to step in.
- More jobs. Generation of more job opportunities (in the Indian scenario) for graduates will help them pay off loan default and prevent underemployment.
- Lower costs of education. This applies mostly to institutions in USA and Canada, where rising tuition costs forces students to forgo college edcation altogether.
- Repair the broken education system (India). A study by Aspiring Minds made news sometime ago, when it famously reported that less than 7 percent of India’s engineering graduates were employable.
There’s a lot to be done to protect the future of our young population. If we don’t step in now, youngsters will be waiting to be in their 50s, after having paid off their debt, to start living in peace.
