by David Ramirez
While student loans may be categorized as the gateway to a chance at a better future, the price we pay for our education has increasingly become a matter of reaching the bottom-line for many of our academic institutions. American political-analyst and historian Thomas Frank once said, “For profit, higher education is today a booming industry feeding on the student loans handed out to the desperate.” According to The Economics of Public Issues anthology collection, the colossal conundrum intertwined in student loans is massive and growing bigger by the day, at around $1.3 trillion, such that this surpasses the total auto loan debt for all Americans. But, what is the solution to the student loan crisis? Well, it depends on how you define it.
The college experience may be a young person’s journey, but ironically, it becomes an older individual’s burden. Indeed, the debt from attending a four-year institution can last an average of twenty years to finish paying off. Likewise, student debt slows down the housing market, in which student loans hold back the purchasing of a home; thus, consequently, 41 percent have postponed homeownership, as well as 27 percent still live at home with parents.
A method that can help solve the matter revolves around the idea of proper counseling. However, we hone in on the attribute of college choices and its aspects. A student’s school admission can impact the amount of tuition and fees, plus room and board; as many of these elite institutions can get “the best bang for your buck,” but do not guarantee students a job upon graduation. Essentially, this can be financially devastating, especially since a student is paying thousands if not tens of thousands more for an expensive education; which could have been obtained, for a lower price, in a relatively less prestigious school. So, here, we can consider alternatives like enrolling in online colleges, which are now gaining popularity for their flexibility in accommodating individual schedules. All of this, at times, for less than a fraction of the cost, leaving students with extra room to pay off their student loans.
However, one of the more favorable options that millennials are now taking is the community college route. Students with the ability to attend a four-year institution right after high school are choosing not to, often due to the expensive costs that tuition burdens on themselves and their families, especially if they are first-generation and low-income students. If a student does not want to jump right into a $40,000-a-year college, without a well thought out plan, then they should consider the benefits of attending community college. Ironically, high school seniors are expected to know what to do with the rest of their lives, and hypothetically, decide where to spend upwards to $100,000 in student loans. Community college, however, would be a financially responsible alternative.Although the thought of community college can be discouraging for many people, the reality is that students who first attend community college, and then transfer to a four-year school, as a Junior, will graduate with about half the debt as opposed to their freshman counterparts. Therefore, contrary to popular belief, such qualities make community college marketable and worthy of consideration.
Another, perhaps less commonly brought up proposal is the United States government’s student loan cancellation, discharge, and forgiveness program. As a politically hot topic currently under debate for more robust provisions by many Democratic front-runners, students should not take this for granted. Historically, this expansive bill was signed into law in the fall of 2007, by former United States President George W. Bush. While it devoted billions in government aid for student loan borrowers, it became known for establishing conditional student loan forgiveness after more than ten years of repayment.
The significance of this program was not just to aid those with student loan debt; its composition was also aimed at making jobs in the public sector more appealing, including employment in education, law enforcement, and healthcare. Nevertheless, although this program has made loan forgiveness possible to those with a pursuit in public service, it is currently being phased out by the Trump administration. Keeping programs like these around for the long-run however, can help soften the blow of student loan debt, as their preservation operates in function with solving the national loan crisis.
Another proposal noteworthy of examination, is considering the student loan repayment method that Australia utilizes, implementing its functioning aspects into American payment plans. Australian students borrow approximately the same as those in the United States, which is $30,000 Australian dollars, or about $22,000 American dollars. The system is practical in that borrowers do not begin repayment until their earnings reach about $40,000 annually. Once above the set amount, borrowers will pay four percent of their income until the debt is resolved. Systematically, loan repayments then rise and fall according to one’s earnings, and— rather than need be paid out separately and risk causing devastating effects to one’s credit history if not performed in a timely manner— are deducted from their salary, which could then be incorporated into American Social Security payments. To be clear, when the borrower’s earnings drop, so do their payments. This allows the devotion of reduced budgets towards essential needs, in addition to eliminating the need for a borrower to fill out exhaustive amounts of paperwork or make any awkward phone calls.
Unfortunately, in the United States, this is not the case, and student loan bills keep coming regardless of the size of one’s paycheck. While borrowers can apply for a reprieve if things worsen, until this is approved, bills will continue to accumulate and consequently can lead to default. Although the push towards reform in student loan repayments is still developing, knowing what alternatives exist— such as attending community college and eligibility to apply for loan forgiveness, cancellation, or discharge— can give weary students a head start into overcoming the challenging task of choosing the most viable option into pursuing higher education. Which, in turn, can broaden the possibilities that influence the academic and financial well-being of Americans with an ambition for a professional career.
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