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Dean of Students

Student loans: Essential or a farce?

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Student grants and loans have, essentially, become a staple of the American Education System. According to recent research conducted by the Institute for College Access & Success (detailed in an article published by TIME.com), 7 out of 10 students that belonged to the class of 2012 graduated with student loans, with an average debt bill of $29,400. College graduates have endured years of debt because they have been told their whole lives that a college education is necessary to becoming successful. College is worth the investment, but debt can really put a hamper on one’s future. Personally, I would not be attending Illinois State University without help from the government. Many of other students can say the same thing, and we will have to pay off this debt for years to come. We understood this burden before coming to college, and concluded that this burden was worth the effort to obtain a degree.

But is the distribution of loans the most reasonable way to provide equal education opportunities to hopeful students? Sure, they give us opportunity that we would not be able to seize without them, but they also place us in a financial hole that can entirely unhinge our plans for our lives after graduation.

When I graduate, I will begin to pay off my loans six months after graduation. This is not a large time frame to get myself grounded enough to begin to pay back $20,000 to the government. This amount can debunk my plans for my future, forcing me to make financial decisions in order to compensate for my loan payments. According to the TIME.com article mentioned above, more student loans have been taken out in recent years, and payment delinquency is on the rise. At the end of 2013, student debt reached $1.08 trillion, compared to $253 billion at the end of 2003. In addition to this, delinquencies on student loan payments have risen 5.3 percent in the last 10 years.

Students are graduating with high hopes for a bright future, but student loan payments are dimming these hopes.

On the positive side, student loans do give opportunity to those who cannot afford higher education. They encourage equal opportunity for people in lower income households, and can help propel these people to success in this country. But, why does tuition have to be so expensive in the first place? Why can’t the overall cost of higher education be lowered so people would not have to take out an absurd number of loans to pay for it? Or, at least increase grant money. Provide the means of obtaining a college education, without the burden of graduating with a mountain of debt.

We go to college to increase our opportunity in our adult life. While receiving a degree does just that, the burden that debt places on us can be detrimental to our progress in our adult lives. These astronomical student loans can even impact the economy as a whole, TIME reports. We will be less likely to spend money on goods and services that help this country thrive economically, because of our student loans.

At this point, I think it is easy to recognize that this system needs to undergo some changes. Not only for us students, but for the economy as a whole.

One Response

  1. Matt

    First of all, the problem should be addressed at the root cause of debt, high tuition prices. There is no doubt that tuition prices have skyrocketed well above the Consumer Price Index (the measurement of inflation). Why has this happened? Tuition prices have gone up for a number of different reasons, but I’m going to discuss the one most pertinent to the article wich is guaranteed government loans.

    Because the government guarantees that pretty much anyone can get loans so long as they fill out a FAFSA, there is no limiting factor for colleges when they set tuition prices. No matter how high colleges set their tuition, they are guaranteed to get the money form the students because the students are guaranteed the money from the government. Basically, the schools get the money and the students are left with the bill. If students could not afford to go to college and no guaranteed government loans were available, colleges would have no choice but to lower tuition prices or else they wouldn’t be able to fill up their seats and they would go bankrupt. This is a simple result of a market economy. That doesn’t exist in our case. No banker would give an 18 year old $20,000+ a year to go to college and study something that doesn’t promise a good financial return. Yet the government has no problem giving little Billy all this money to study something that provides “intellectual enlightenment”, but no financial security. The college understands that they are guaranteed the money, and it is in their best interest to raise prices. Silly people believe that loans go up because tuition prices have gone up. Smart people understand that tuition prices go up because more loans are available.

    The government has essentially created an inelastic demand for higher education when it really isn’t necessary. All throughout high-school, kids are brainwashed into thinking that if they don’t go to college, they’re going to be failures, not get a job, be stupid etc. Then the government gives them money to go whether they should or not. HOW IS IT NOT OBVIOUS TO PEOPLE?! One of the very first laws of supply and demand is: IF DEMAND INCREASES AND SUPPLY REMAINS UNCHANGED, A HIGHER EQUILIBRIUM PRICES OCCURS. Colleges can limit supply, government creates abnormally high demand= high tuition prices.

    Another reason tuition is so damn high is because colleges hire a bunch of unnecessary administrative staff that literally contribute nothing the the learning experience. It’s just a bunch of coworkers getting their buddies jobs.

    Finally, colleges have begun to turn themselves into high-class resorts rather than teaching institutions. So much money is poured into fancy sport complexes, luxury dormitories, and other unnecessary things that attract freshman on visitation day, but will be used by the vast minority of the students.

    The entire higher education financial system needs to be redone to promote competition between schools. That way students can actually work part-time during the year, and full-time during the summer and graduate with minimal debt rather than spending the next 30 years repaying.

    Financially speaking, college isn’t worth it unless your parents can help you pay a significant portion, you get scholarships, test out of classes with AP, study a highly demanded subject, or become best friends with a rich kid.

    Reply

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