Drowning in Debt: The State of Student Loans in America

Updated: Mar 11, 2020

About one-sixth of the U.S. population over the age of 18 currently carry a federal student loan. As a country, we owe 1.5 trillion dollars in federal student loan debt, plus around 119 billion dollars in student loans from private sources. Why is it that education price has drastically increased while the quality of that education has stayed the same? After college graduation, most American adults find a job in some capacity. However, their true first job is paying off their student loan debt – usually tens of thousands of dollars. Roughly half of all jobs in our country that pay over 35,000 annually require a bachelor’s degree or higher. This number is expected to grow in the coming years. Americans are obviously going after the money…but at what cost?

Young adults are told to go to school to unlock opportunities. Unfortunately, college can do just the opposite. Our student loan crisis prevents many Americans from starting their own business or pursuing their genuine passions. For other Americans, it hinders their daily life. Rent, car payments and even basic groceries and food are often compromised. Universities are aware that no matter what, students will always be banging their doors down to get in. Because of this, they raise tuition. This, in turn, raises loan amounts, which in turn raises tuition again. It’s a never-ending cycle. On top of this, student loans are incredibly easy to qualify for. The government knows that students have no collateral for loans, so they back them. Almost anyone can qualify for loans to some extent. This entices students to look at expensive private schools or out-of-state schools.

American parents should begin putting away money for college as soon as their child is born. A 529 education-savings plan is another tool. It’s a government-administered investment tool that provides tax relief to families who set aside money for a child’s education. However, only 3 percent of Americans invest in a 529 account. Those that do have on average 25 times greater assets than the median household. The simple reality is that planning for a child’s college education requires steadiness and financial consistency that is scarce in today’s middle class.

Free college has been discussed in America. Politicians such as Bernie Sanders advocate for it. In 2016, the federal government spent almost 100 billion dollars subsidizing college attendance. For less than 80 billion dollars, tuition could be eliminated at all public colleges. I’m not necessarily advocating for free college. It’s just absurd to me that with a plan, our country could alleviate so much debt, so much burden. Instead, we focus on other issues, “bigger issues”.

We need to educate ourselves on the cost of college. Community college is a very smart, affordable option. Students can take classes toward a 4-year degree while also figuring out if they truly want or need to get a 4-year college education. The school system needs to stop pushing kids toward college. Today, there are a plethora of other routes for a young adult to take. Students and their families should be taught about loans and what they entail. Financial planning classes should become mandatory in high-school. However, at the end of the day, the cost of school needs to come down. If government intervention is mandatory, so be it. Universities have become greedy and money-hungry and this is the exact opposite of how it should be.

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