Before I became a college student I always knew of the talks of high tuition rates and the troubles that came with it. Since becoming a student, myself included have had to take out loans to get me through the year and the burden of having to worry about paying is constant. Ever since the earlier 2000s, the trend of debt only gets higher and higher every year. Student loan debts have been showing a crippling effect on the economy as the debt increases.
“Our higher-ed system is the envy of the world, but if we as a country do not make important policy changes in the way we distribute, administer and manage federal student loans, the program on which so many students rely will be in serious jeopardy,” DeVos said, according to her remarks released by the Education Department.(Forbes) This crisis as we know of is becoming known to be the biggest economic crisis or threat the United States has ever faced.
Throughout the US, the data has consistently shown that student loans have been dragging down our economy down. This isn’t a recent issue we have been plagued with but student loans have been a major problem for many years. With students taking out loans they put the economy in harm’s way because, with all the debt they collected, it reduces their chances of buying a house or having a profitable income.
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Student loans also affect the future growth of the economy as the student loans keep going up the economy will start to go down in correlation. This year has been the worst year for student loans. The average college graduate with a bachelor’s degree left school with $28,446 in student debt in 2016, according to data from the Institute for College Access & Success. There are around 44.5 million student loan borrowers in the U.S who owe a collective $1.5 trillion as of March 2018, according to the Federal Reserve.
Student loans were created as a solution to the vast majority of people’s financial problems for paying for college but has only created a much bigger problem that keeps on growing. Of the people who request a loan, most always end up being in debt in some sort and with this being one of the only options to pay for college it is only hurting themselves and the economy. There are many factors to explain why the student debt crisis has occurred, “DeVos cites the Obama Administration’s 2010 decision to have all federal student loans issued by the federal government, rather than have a portion issued by private banks, as a turning point. As a result, DeVos says colleges and universities were incented to raise tuition.” (Friedman, 2018)
While that may be true Annie states otherwise, that the colleges that are the one who is to blame for the rising of the crisis. (Nova, 2018).In fact, the main source of recent loan defaults is for-profit colleges. A story written by Annie Nova talks about a man in his mid-50s named Claude Richardson who returned to college in the hopes of finding himself a new career. He attended two for-profit schools — the University of Phoenix online, and the New England Institute of Art…education at both schools proved disappointing, and he never found a job in his field of study, Instead, the 65-year-old man works 60 hours a week as a driver for a transportation company. He makes $8 an hour…with a student loan balance of more than $160,000.( CNBC Personal Finance).
When we hear these stories about the student loan crisis, it is usually filled with details about certain people. Often called the “victims” of student loans who are often graduates of some of the best colleges and with top colleges that now cost around $65,000 per year in total, it is easy to believe that these most expensive and competitive schools, the ones in all the stories about tuition rising much faster than inflation, are responsible for the supposed student debt crisis. “Universities hoping to secure federal student aid funds must demonstrate that students can repay their debt and will not default within the first three years after graduation.
As a result, they may encourage students to defer or forbear payment to protect institutional interests, without necessarily warning young people of the severe financial consequences this may lead to”(Quartz). The colleges find a way to be on top of it all by taking advantage of all these students. This debt can also affect your wellbeing. Student loans can be a problem to the economy and yourself as well. The student loans debt can leave you overwhelmed and affect your health. It could affect one of the components of your health being the mental component. The mental component being the way you’re able to deal with reality. Meaning that not only are you putting the economy in danger but your health as well.
