The Student Loan Problem in America and Ways to Solve It

Abstract

This research paper consists of five published articles that describe higher education due to student loans. The articles explain and point out several different problems for student loans. However, other articles will talk about solutions that America can do to increase, higher education. Each article will point out and advise the readers about improving student loans. This paper will go through the study of Bloomberg, Christopher L. Peterson and Edvisors. As well from other sources to establish a higher education, for students that struggle with loan problems. This will also consist of helpful tips for avoiding loans in America. We will discuss how loans affect people in their lives. Also, how big of a crisis this issue is.

Introduction

How can I continue my education, when I can’t even pay off my student loans? How can I pay off my student loans without having the education that I need? So many questions that recent college students ask themselves. Most college students have six months to find a job and start paying their monthly bills. However, several college students can’t find a job in six months. How will they do it to pay off student loans? Some may need a Master’s Degree yet can’t obtain one without accepting various loans. In the `1960’s Student Loan crisis had began to distribute to all students in the United States. This provided an opportunity to continue their education in universities or college. This goal was to let people achieve their goal in attending school to pursue a higher education. However, years have past and our government still isn’t helping students. The majority of students aren’t able to pay back their debt.

What are Loans and How do they Affect Students

As stated by, Bloomberg from the article Fortune (2018), for the past eleven years; one-hundred and fifty seven percent of college students have accumulated their student loans. They also informed, fifty-two percent of of auto loan has grown while, one percent of credit card fell. This is a total of $1. 4 trillion dollars worth of student loans, Furthermore, Bloomberg (2018) mentianted, “Student loans are being issued at unprecedented rates as more American students pursue higher education.” Therefore, students continue to pile up on their debt, while trying to educate themselves. For instance, people go to school to obtain a degree and some students don’t qualify for federal aid. In addition, the federal government also known as FAFSA grants students two different types of loans. They have to apply for FAFSA and if he or she doesn't qualify, they offer them. Subsidized or unsubsidized loan, there is a difference between both of the lambs. To add in the FAFSA (2019) website, they added, “Loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.” Also, “loans made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.” WIth that being said, a subsidized loan requires no interest rate. However an unsubsidized loan requires you to pay an interest rate. They also have a similarity you have to pay them back after graduating from a university or college. The student has up to six months to find a stable job and start paying off their loans.

In 1972, Sallie Mae was established to fund college students with loans however since 2004, it’s became a publicity traded company. When finding student loans there is a big challenge you have to find one with the lowest interest rate. If you accept a loan with a high interest rate you will take a great amount of time paying it off. In a website named SoFi Learn (2018), points out seven different key points about loans. Some reasons being, the average student loan balance is around $34, 000, Americans with student debt have around four loans on average, and Americans currently owe a combined $1. 34 trillion on their student loans.” They state that older adults from the ages of 35 and up have the highest debt. Students who are younger ages 18 to 20 owe less debt. How can we continue our education when we struggle in the long run. People try their hardest to further their education and some even do it to get a raise in theri check. However, they go through the process all over again, once they achieve a higher education. Paying off student debt is a burden and there are several ways to limit the use of loans.

Consequences of Student Loans

Furthermore to discuss, Edvisors informed us that if you cannot repay your student loans there will be consequences. For instance, late fees will be applied they can collect up to 20% of your check. This is a constant issue in America most college students don’t find a job in six months. They end up paying interest rate and late fees, the government should change loans. Abigail Hess wrote an article about the average student loan they owe after they graduate. He published that 70% of college students graduate with student loans.

Overall, this has been developed of being one of America's biggest financial crisis. As stated by hess, “an increase in student debt has led to a decrease in home ownership.” THey also had a study and stated, that “students who graduated from college in 2015 will have to delay retirement until the age of 75.” This has come to conclusion that loans are affecting people in their everyday life. Loans are a problem in America and we should do something about it. Most people don’t acknowledge it and it's a struggle.

Helpful Tips to Limit Loans

Attending college can be stressful especially if you don’t receive federal grants. Several college students will receive student loans by the end of their education. After these students graduate they have to pay back their loans. They have six months to start paying off their loans and it can be a burden. You can start off by saving money before attending college. You might think well it won’t be much however, you can use that money to make payments or your student loans. Start off by having a part time job, and save half of your check to your savings. Apply for scholarships most universities will provide several different scholarships. As stated by Jennifer Wadia (2018), “The more you are awarded, the less money you’ll have to dish out to student loans. ” This will help you in the long run. You should try to avoid getting any types of credit cards that way you don’t pay more. A college student should try to manage their expenses. You can always track your loans online to keep up with how much you owe. In addition, the Department of Education passed a law to help pay off loans. If you are a teacher working in a low income school for five years they’ll forgive 5, 000 thousand dollars of your loans. There are also other resources that will forgive you part of your loans.

The main issue in today’s world is affording college, receiving scholarships is a great way to pay off school. It would help pay off classes and also buy books and other school supplies. It's easy to apply to a scholarship, usually universities provide free scholarships. Yet they have several different requirements for each. For instance, depending on your major, age ethnic background and other information. To illustrate, Max Fray is an author for Debt. Org and gas informed about the different types of scholarships and other aid provided in the United States. For instance Fray (2019) stated, “Approximately 5, 000 groups and organizations across the country that provide such aid. Each scholarship will have its own set of qualifying procedures, rules and deadlines.” As informed, there are several different qualifications to a scholarship. There are ways to provide a free debt college education without the use of loans. Another way to provide a free debt college experience is to save up. As a child it's a good way to start saving for college at a young age. For example you or your parent can start off with one-hundred dollars a week and put it in the bank or a bottle. Each week for the next eighteen years that amount will sum up to more than, 6, 000 thousand. You can give this as a payment for your student loans, after graduating.

Furthermore, most students aren’t well informed about student loans and get several loans. The Students need to get loans because there isn’t another way to afford an education. However, college students should get informed in what they're getting themselves about. For instance, Edvisors Network in this website it informs us about student loans. As stated Edvisors (2019) “Standard repayment on federal loans involves a 10-year repayment term with equal monthly loan payments. Federal loans also offer extended repayment, which has a longer repayment term, and income dependent repayment, which base the monthly payment on the borrower’s discretionary income.” Therefore, you should research on the loans before getting one. It is a tricky thing if you don’t read about it and inform yourself.

How Big is This Crisis

Loans in America have been considered as one of the top ten economic issues. Researchers and politicians have tried to improve loan requirements and their regulations. However, it's been difficult to pass laws to try and improve loans. Moreover, they have higher expectations in jobs and require more education than just a highschool degree. Hess expressed, “by 2020, 65 percent of all jobs in the American economy will require education beyond high school.” Over extensive research they’ve come to a conclusion that, we now need higher education.

However, how can we continue our education when we can’t afford it. Should we lower the cost of tuition? Should we have free access to school? So many questions and so little have been done. As Christopher Peterson from the University of Utah articulated, “when students take out loans and then don’t graduate from college.” This is another crisis that we’ve encountered with.

Conclusion

As the economy continues to decrease and tuition continues to increase job salaries continue to remain the same. Paying off student loans has been a difficult challenge throughout time. This has been a huge crisis in America and people don’t realize it. If the government, finds better solutions to prevent such debt, maybe the United States of America wouldn't be as much in debt. Our ancestors and family relatives struggled for years to have access to schools. Now in the 21st century, we are struggling to keep our heads above the water. There are several pros and cons when it comes to loans but we should consider free money instead of paying it back in the future. People have now been getting informed about the different types of federal funding and other options than loans. If we continue to expand our knowledge we can successfully limit loan use and therefore, help our economy increase. Higher education has been important, we need education in order to gain access to our knowledge of the world.

References

1. B. (2018, October 17). America’s Student Loan Debt Crisis Is About to Get Much Worse. Retrieved May 06, 2019, from http://fortune. com/2018/10/17/student-loan-debt-crisis/
2. Fray, M. (2019). Scholarships & Grants for College Students. Retrieved May 06, 2019, from https://www. debt. org/students/scholarships-and-grants/
3. Hess, A. (2018, February 18). Here’s how much the average student loan borrower owes when they graduate. Retrieved May 07, 2019, from https://www. cnbc. com/2018/02/15/heres-how-much-the-average-student-loan-borrower-owes-when-they-graduate. html
4. Peterson, C. L. (2018, October 22). The Student Debt Crisis: Could It Slow the U. S. Economy? Retrieved May 07, 2019, from https://knowledge. wharton. upenn. edu/article/student-loan-debt-crisis/
5. S. (2018, January 19). 7 Facts You Didn't Know About Student Loan Debt. Retrieved May 06, 2019, from https://www. sofi. com/learn/content/7-facts-didnt-know-student-loan-debt/
6. T. (2019). Federal student loans for college or career school are an investment in your future. Retrieved May 06, 2019, from https://studentaid. ed. gov/sa/types/loans
7. Wadia, J. (2018, September 25). How to Avoid Student Debt. Retrieved May 07, 2019, from https://www. studentdebtrelief. us/college-tips/how-to-avoid-student-debt/