Student loan debt - Justin Yang

 What is Student Loan Debt?

       Student Loan debt is very simple in meaning, it is a debt accumulated from borrowing in order to attend a college. In simple terms it may seem like student loan debt isn't an issue requiring attention. However Student Loan debt is becoming a serious issue. Obtaining a loan allows for a student to move on to higher education. It allows many students to obtain degrees and eventually get a job. It is true that loans are sending more students to college but the amount of jobs that the economy can supply is unable to match the demand. In turn this creates a increasing amount of debt among students who are working jobs that do not require a degree. 

 My thoughts on Student Loan Debt

      Student loan debt is an overlying issue that many students face. As a student, I often hear other students talking about the amount of loan debt they have, which is why I feel the importance of this social issue striking most college students.. This is the major reason while I feel student debt is an important topic that affects the community I'm in. Most if not all students have some form of debt when they graduate. This problem continues as students get higher and higher into the education system. Debt begins piling with no real way to pay it off during school terms. Being that college students are working for the degree of their choice and possibly a graduate degree, debt continues to be an issue. If student loan debt continues many students will come out of college with an exceedly absurd amount of debt. I do think that Student Loan debt causes a great amount of stress to student.

For students like Jessie, student loan debt accrues interest the more a student forgoes payment. Student loan debt is a result of the increased tuition in order to attend college. For someone who graduated with a degree to be unable to pursue a career and focus on paying back loans ties into the great effect that student loans have on students. I do think students need to think about loans and create a plan to be prepared for loan payments. There are many situations like Jessie that needs to be addressed and solutions need to be implemented to fix the Loan borrowing program.

 Research

      The need for a degree in order to get a higher paying job is becoming a necessity among the youth. These days the rising cost of tuition has created a situation where many students are required to take loans in order to attend college. According to genfkd.org, the United States has a 1.3 million total student loan debt, it increases $2.726 every second. This overwhelming debt affects the life of college graduates. Many assume that this loan debt is easily paid off once the graduate obtains a job. However as students continue to accumulate loan debt and the demand for jobs increases, loan debt is not easily paid off. Newly graduated students are not the only ones who suffer from debt. In 2013, 30 percent of people aged 55 to 64 were reported to still have debt from college. This asks a serious question for students who plan to enter higher education. Those who pursue a college education expect better earnings. Instead many students face loans that may hinder their future decisions. 

                                          Obtained from reference 2

      A large concentration of students have moderate loan debt sizes around $10,000 - $25,000. Looking at the chart a large amount of students have a sizable amount of debt that exceeds $100,000. There needs to be reform to help students who have debt sizes that may take a large portion of their lifetime to pay off. For a system meant to help students excel into higher education instead hindering them is flawed. In Sweden colleges offer free tuition for students, however many students still graduate with debt. 

                                            Figure obtained from reference 4

       Based on the figure above Sweden has a debt ratio similar to the US. There is a simple explanation for why Sweden doesn't face the same problem despite having similar debt ratio. Interest rates in Sweden are significantly lower than in the US. Repayment plans in Sweden are longer and they give debtors a burden less loan experience. This allows Sweden student debtors to finance a house, obtain a job, and be independent from their parents. 

       

 Solutions and Resources

      There are many solutions to reducing the amount of debt that students receive. A solution thought up by thewashingtonpost suggests the idea of capping minimum monthly payments based on 10% of their take-home pay. I think this is an excellent solution to releasing the burden of making monthly payments on time. For many students having to keep on with monthly payments causes stress. Also unreasonable payments would be weeded out as the amount needed to be paid monthly is scaled based on income. Students should be allowed to refinance their loans in order to get lower interest rate. In turn this means that they have lower monthly payments. One solution demands that the student understand the situation that they are getting themselves into. As mentioned before students need to understand the impact of loans as a result of higher tuition costs. For many college isn't a path that they take, college isn't the only choice to take. We are taught to learn that college is something we attend after high school. However in many instances those who don't go to college are also extremely successful. Whether they went to trade school or pursue a passion that doesn't require a college education. Educating the student debtor and planning ahead is an excellent way to prepare them for payments and growing interest rates. 

•  Allow students to refinance loans to obtain lower interest rates
• Base monthly payments on the income earned 
•  Educate the debtor 
• Teach students that College isn't the only path
• Employ a system similar to Sweden's loan payment system 
•  Allow people to default loans

 My personal experience

      As a student in a college, it is hard to say that I don't have some form of student loan debt. Although the amount of loans that I currently have accumulated is not a massive amount I often worry about my future. I am often pessimistic about how I will pay off my loan however small it may be. Paying off debt is not fun experience, it is quite intimidating to think about the monthly payments and accumulating interest. Another issue that I have with student loans is the pressure it may put on my parents. I don't plan to have my parents help me in my payments for the small loan I have. Like the video about Jessie I fear that what is happening to her and her parents may happen to my parents. I feel I need to prepare a plan in order to prepare myself for when I start repaying my loan debt to my loan provider. Like many of the other students who suffer from loan debt no matter what size of debt we are in. It is a struggle to keep up with rising costs of tuition while staying competitive to be able to join the workforce after graduating. Students like myself will need to worry about paying back our loans and looking for a job when demand is very low. 

Opinions of other students 

                                                     Poula Mansour

"I think student loan debt puts a lot of pressure on students because they always feel they have weight on their shoulders. They have to think about the money that they have to pay back, I also think that education should be free for everybody." 

                                                     Ashley Ibanez

"Student loans puts a lot of pressure on students especially those who are low-income. Although it doesn't affect me, I have a couple of friends who have students loans and are stressing because they worry for their future. It is a huge bummer that student loans exist."

                                                    Pablo Flota 

" Student loan debt is an issue facing the country and is heavily based on the fact that private corporations and colleges can work together to create profits that overtly inflate the spending students conduct. Reform must be made in legislation to minimize the tuition increases colleges can increase in order to minimize this unfortunate circumstance."

Call to action/Final thoughts 

      There needs to be some sort of reform in the student loan system. I feel as though the loan system isn't inherently broken itself. What is broken is how the loan debt obtained during school continues to affect students once they graduate. Using Sweden as an example, tuition is free but students still have debt. However students are able to pursue careers, finance houses, and just be able to live stress-free. While students in the US have constant thoughts of how they will be able to keep up with payments. With this said I feel there should be lower interest rates on loans. I think a system like Sweden will help students relax and not stress about life after college. Change needs to be implemented, higher education is becoming a consumer market. Students shouldn't be consumers in a place where they wish to better themselves. 

References

1. “How Is The Student-Debt Crisis Affecting The Lives Of College Graduates?” [FKD], 29 Mar. 2017, www.genfkd.org/student-debt-crisis-affecting-lives-college-graduates.

2. Friedman, Zack. “Student Loan Debt In 2017: A $1.3 Trillion Crisis.” Forbes, Forbes Magazine, 21 Feb. 2017, www.forbes.com/sites/zackfriedman/2017/02/21/student-loan-debt-statistics-2017/#3e69101a5dab.

3. O'Malley, Martin. “Federal solutions to our student loan problem.” The Washington Post, WP Company, 23 Apr. 2015, www.washingtonpost.com/opinions/federal-solutions-to-our-student-loan-problem/2015/04/23/a9ab9f6c-e69a-11e4-9767-6276fc9b0ada_story.html?utm_term=.487f75480988.

4. “College in Sweden is free. So why do students have so much debt?” College Financing Group, www.collegefinancinggroup.com/student-loan-repayment/free-college-in-sweden-high-student-debt/.