Student
Loans
By:
Matt Kolbow
For
Most people the next step after high school is college to get a better
education, and everybody know nothing is free anymore. College is very
expensive and unless you come from a rich family you will most likely need to
take out loans to pay for the overwhelming price of college.
The
total consumer debt rose by 1.1 percent to $11.28 trillion. This is the highest
increase since the beginning of 2008 which happened due to the housing
collapse. Of this $11.28 trillion, outstanding student debt rose from $33
billion to $1.03 trillion. With a record of 11.8% of loans were behind on
payment by 90 days or more.
The
average student loan is around $24,000 with about 60-70% of the student owing
that much. According to FinAid you will have to take a loan out for a maximum
of 20 years. The standard loan is 10 years with a payment of $230 monthly and
an interest of $7,619. But since it would take 20 years to pay off you have to
get an extended plan for 20 years where the number change to $152 monthly but
the interest raises by $9,000 to $16,639. If you don’t get a good job and make
a lot of money after college then you would really be in debt by 40,000 instead
of the $24,000 that you started with. A group of bank chief executives warned
the seven-member board of Board of governors that the federal student debt is
starting to become an unsustainable amount. Also that if there is a generation of college graduates with a
lack of expendable income could negatively impact the overall economy for years
to come.
Of
all of this debt somebody has to be collecting the interest that comes from it,
whom is the U.S. Department of education. When the fiscal year ended Sept. 30
they reported that they had more than $42.5 billion in profit. This is the
second most behind 2011 and is roughly a third higher than 2012. Without
Congress and Obama agreeing about a temporary lowered student loan interest
rate for 2013 the profit would have increase by more than $8 billion.
Student loans cannot be
discharged under current bankruptcy law, so then it will change how delinquent
you are. Delinquency affects your credit rating. In today’s economy which is
more of a credit driven economy no 20 year old can afford to pay all of the
student loans and then be delinquent at the end of it. If you’re delinquent
then your credit rating is hurting. This would then make it harder for you to
take out other loans for a house or a car.
With the U.S. being in such a
substantial debt and the budget for education getting smaller and smaller
Colleges are going to have to keep on increasing the price to attend their
college, and the Department of education will have to keep on increasing their
rates so they can make up for all of the money they used to get in their
budget. If you mess up with this substantial amount of money you might also not
be able to recover your credit for many years after. So then you wouldn’t be
able to take out bigger loans for quite a while. With this being said this is
one thing you don’t want to mess up.
What I have noticed reading this article as well as watching the video is that colleges honestly are charging their students way too much money to attend their schools. Everyone is curious as to how we can overcome the unemployment rate or poverty for even that matter, well maybe lower the price of school for a change. Yes, there are plenty of opportunities to get scholarships and other funds in regards to affording school, but for some individuals scholarships are not a possibility or even enough to pay off college completely. If the cost to go to college wasn't so high, students could maybe afford to go to more prestigious schools rather than the cheapest one they can find. We should not have to penalize people for working hard in order to get accepted to prestigious colleges just because they can't afford it. With that being said, student loans has appeared to be a never ending issue for college graduates and I believe colleges need to realize this situation and make changes as soon as possible.
ReplyDeleteThe amount of money that college costs is beyond a ridiculous amount. Every year the cost spirals more and more out of control. Your debt doesn’t stop there because when you take out loans there is interest that you have to pay along with it. Every little thing adds up to an enormous grand total. This debt you have to pay back equals numerous years of work, assuming college students have well paying job. The debt I will have to pay off after I graduate college makes me wonder if college is truly worth it?
ReplyDeleteI know plenty of people today who are still paying off their student loans and they are middle aged. This is a problem - I mean what colleges are factoring in to tuition, are we even utilizing all the expenses that come with it? I mean some include things on campus like the fitness center that people didn't even agree to pay for nor will they ever use it. Those sorts of things are things we have to pay for, and it will become worse when they eliminate some benefits and advantages. All the finances that fall into it, it's setting us up for bad credit when we're older due to student loan debt. Scary thought.
ReplyDeleteStudent loans are pertinent to us all because we are applying to colleges and considering the costs of such education. However, student loans can sometimes be hurtful because they can put you in debt. That makes it very hard for recently graduated people to live on the money they are making while paying off their loans. This hurts the economy as a whole because the college graduates can't buy goods because of their lack of money from paying off the loans.
ReplyDeleteIt is a shame to see many students struggling with their student loans. But this is a nice example of supply and demand in a way. Since not many students can afford the price of most college they have to substitute it for another college. But you would think that the prices of colleges would drop since the amount of student attending is dropping.
ReplyDeleteThis piece really makes you wander if college is worth it or not. Sure furthering you're education is essential to getting a job, but is it getting you a job that will pay off you're college right after you graduate? Most likely not, which is the other problem in this issue you presented. With school being so expensive, more and more kids are not going to have college in their plans, which is going to hurt the economy, and colleges. The economy will have higher unemployment, and the schools will have less revenue, which is bad. Obviously one of the two is going to have to give with this issue, either the economy is going to have to provide better paying jobs, or colleges will have to start making school cheaper, otherwise nobody wins, and there will be a tragic downfall, in the society.
ReplyDeleteThe interesting piece of this new obstacle in the future generation of America is that the education, and therefore, qualification of a significant population of our youth will decline immensely. Higher paying and otherwise more influential jobs will have less applicants, further decreasing the level of performance set in the future corporate America. This lower performance has a massive potential of causing a vast economic decline, and that's without even mentioning the lower paying jobs across America. The competition in these positions will be so high that employers will be unwilling to pay higher wages than need be, otherwise decreasing the spending power of the middle-class and threatening the economy. On the other hand, as more and more people are forced into these lower paying jobs, teenagers trying to save up for college to have an advantage over their competition later in life, will have very limited job opportunities to do so. All-in-all the soaring cost of college will not only effect today's generation, but also that of several generations to come.
ReplyDeleteStudent loans are a big part of how all people go to college. Without student loans the college graduation rate would be much lower. Social Security and Medicare/Medicaid are becoming a lot more expensive for the U.S. There isn't as much money for education and it keeps on diminishing more and more. With the education budget getting cut lower and lower there isn't room for as many education needs to this is a big problem.
ReplyDeleteIt's for sure a scary part about going to college and a large part of it originates in how crazy expensive college is. It seems like the universities have more money than they know what to do with. And with so many kids going to college, the loans and interest will add up quick. At some point it needs to be limited so that the price of college doesn't keep enough of America from getting an education.
ReplyDeleteThe price is rising
ReplyDeleteWhile students struggle to pay
How can we succeed
With only a dime
The price is far beyond me
How can we succeed
Darkness surrounds us
As the overbearing debt
How can we succeed
No future is bright
More school unattainable
How can we succeed
There is no knowledge
With no funding for college
How can we succeed
how can we succeed-We were meant for more than this-how can we succeed
How can we succeed
With no funding for college
There is no knowledge
How can we succeed
More school unattainable
No future is bright
How can we succeed
As the overbearing debt
Darkness surrounds us
How can we succeed
The price is far beyond me
With only a dime
How can we succeed
While students struggle to pay
The price is rising
With the price of college being so expensive a lot of people are deciding not to further their education because they are worried of the debt they could put themselves in. Most students will not get a job right out of college and those that do most likely will not be making enough to pay off there loans right away. No matter what you are going to get stuck with debt, it's just a matter of whether or not you're willing to take the risk and pay it off.
ReplyDeleteThis struggle is hard for me to understand, as i'm used to a different education system. In Denmark education is free, and is therefore accessible for everybody. We do pay a insane amount of taxes in order to make it possible. Approximately 30% more than the american tax percentage. It would be interesting to find out which system saves you the most money.
ReplyDeleteIt’s crazy how it takes, on average, $24,000 just to get a decent education. If prices are expected to rise in the future, the generations behind us are doomed. But with the help of student loans, we all have the chance to be someone. Although loans can temporarily ease our minds while in school, afterwards, the stresses of paying back the loans might just outweigh the benefits we receive by getting a degree. Newly graduates now don’t find jobs immediately, as easily, or as well paying as they could before, meaning that they are unable to pay back their loans right out of college or barely get by because of these loans. Colleges need to understand the stresses all graduates go through and somewhat make prices compromise.
ReplyDeleteYeah, it's insane it can really take up to 20 years to pay back college debt. Especially considering a job isn't guaranteed things could be very bad. All that college and it is a risk you have to take in order to get a job in modern day. School makes you look much better to employers, though. This gives you the upper hand in being able to earn that debt back. That is what college is for, right? You have to spend money, to make money! These are some pretty crazy statistics, though.
ReplyDelete