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The Issue of Student Loan Debt as a Primary Reason to The Rise of College Dropouts in The United States

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The average student loan debt in the United States is $25,000. This is a large burden to have even for those that are able to land a high-paying job when they join the workforce after graduating college. The financial burden is even more devastating for those that aren’t able to get a decent paying job or a job at all. For those that graduate, the financial burden of student loan debt at least comes with a degree that will help them land a decent job, but for the 41 percent of students who dropout of college, it is a massive financial burden with no silver lining.

With the standard 6.8 percent rate Stafford loans, a person with $25,000 in student loan debt will expect to pay $280 a month for 10 years. For a person that is able to land a job with an entry-level salary around $50,000, their student loan payments will only be around 6 percent of their salary each month before taxes. For those only able to get a minimum wage job, were talking almost a quarter of their wages each month going to paying off their student loans. Even with programs that allow borrowers to pay what they can depending on their income, interest still continues to accrue, creating more and more debt that becomes harder to pay off with no guarantee that a high-paying job will come in the future.

Contributing to this issue of student debt, underprivileged students who are most in need of financial aid are more likely to dropout as a result of accumulating student debt. A report by Demos found that low-income black and latino students were more likely to dropout of college as a result of debt. Compared to only half of white students who cite debt as a reason for dropping out, 70 percent of black students dropout due to debt. Many of these students either don’t have the money to stay in school or cannot focus on both school and their jobs that they needed to pay for school. For students that enroll part-time, likely to be able to work part-time to help pay for school, only 43.2 percent end up graduating within six years. This only creates a feedback loop in which those who are underprivileged lack the wealth to focus solely on school, which makes it less likely they will graduate with a degree that will help them better their circumstances.

The simplest way to remedy this issue is to offer more generous financial aid packages that limit the amount of loans that eat up much of the financial aid package. Often times, students see that their financial aid packages cover all of their needs, but they do not notice that a large percentage of the financial aid comes in the form of loans that they will have to pay back. One positive is that loans like the Stafford loan are subsidized and they have relatively low rates, but it doesn’t take away the fact that students will owe tens of thousands of dollars in loans if and when they graduate. According to Demos, the higher costs of college and as a consequence, higher student debts is the result of the continuing reduction in higher education spending by states. In the decades prior to 2012, state expenditures going to higher education per student dropped by 22 percent. This means less money for student grants and more money that students have to pay out of pocket.

Attending college as gotten more expensive over the years and as more people are going to college than ever, there has been a rising amount of student loan debt. This is driven by a drop in state expenditures going to higher education, which has resulted in the costs shifting from the state to students. Those hurt the most by this are minority students that need financial aid the most. The data shows that these students are more likely to dropout of college as a result of debt. By increasing state expenditures for higher education, the burden of paying for college will lessen and it will help increase student retention rates.

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The Issue of Student Loan Debt as a Primary Reason to the Rise of College Dropouts in the United States. (2018, October 26). GradesFixer. Retrieved January 21, 2022, from
“The Issue of Student Loan Debt as a Primary Reason to the Rise of College Dropouts in the United States.” GradesFixer, 26 Oct. 2018,
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The Issue of Student Loan Debt as a Primary Reason to the Rise of College Dropouts in the United States [Internet]. GradesFixer. 2018 Oct 26 [cited 2022 Jan 21]. Available from:
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