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Impacts of student loan debt on borrowers essay
Problems with student loan debt
Impacts of student loan debt on borrowers essay
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Overview
The student loan crisis is one of the biggest economic issues of our time. Millions of students owe record amounts on their student loans. One of the biggest issues with student loans is the fact that they build up interest over time. If you are looking to pay off your student loans, it is vital to have some sort of plan to do so. Many students think they will just pay the monthly payments and their loans will go away. However, many times they find out the hard way that the minimum payments barely cover the interest on the debt. Here are several ways to get out of student loan debt.
Student Loan Interest
The interest on student loans is fixed and determined by the government. There are many people who also go to get private student loans. The bad thing about the regular student loans is the fact that they cannot go away. There are a lot of people who owe tens of thousands of dollars in student loans. These really restrict the amount of money that a person can pay back over the long term. If you are someone who has just graduated from college, it is important to start paying off your loans quickly. One of the biggest drivers behind the student loan crisis is the fact that so many students are having trouble landing a job in their field. If you are looking to make an investment in your future, paying off your student loan
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There are many people who assume that they can just pay the payments every month and not think about the loans. Although they will eventually be paid off, paying a lot of money towards your student loan debt will reduce the total interest that is paid over time. There are a lot of people who do not realize just how much interest must be paid into their loans in order for them to go away. The good news is that it really does not take a long time to pay off your student loans if you are committed to doing so.
Final
Martin and Lehren’s article “A Generation Hounded by the Soaring Cost of College” addresses the issue faced by current and former college students dealing with large amounts of debt due to student loans. The article presents the reader with stories of former college students who have either graduated or dropped out, and their struggle to pay off their student loans. The article also talks about issues such as students not being informed about high amounts of student loans and why student debts have increased. Martin and Lehren also make the issue of student debt more intimidating by giving examples of high amounts of student loans students have had. The article gives a very hard reality check to anyone reading as to how bad the problem of student debt is.
Along with scholarships, fellowships, and grants, student loans are an important method of financing post-secondary education. With tuition costs rising, more students are borrowing to pay for college education today. However, not all students realize the burden of paying back their student loans. Many are defaulting.
Many Americans are seeking an ideal presidential candidate for our next election; furthermore, many college students seek a candidate that has their best interest in mind, leading many to focus on Bernie Sanders and his ideas for an affordable education system. In the article, The Myth of the Student Loan Crisis, Nicole Allan and Derek Thomas focus the article on the risky investments of college and questioning the rising debt levels as a national crisis. While Allan and Davis claim the risk of college and mention rising debt levels as a national crisis; however, Allan and Davis use charts to support their stance while avoiding the issues Americans need to focus on, such as the rising cost of college, “justifiable debt”, and the cost of those not contributing to society.
In “A Lifetime Of Student Debt? Not Likely” by Robin Wilson, he talks about how student debts aren’t as bad as everyone seems to think. One of the most common reasons students default on their loans is pointed out by Wilson. He states, “the problem among students who go heavily into debt is that they are determined to attend their dream college, no matter the cost.” (257). Attending a smaller college, or even a 2-year university can help cut down on the costs. And even if that 4-year university is the only way you’ll get your future career, taking out loans to help pay for a degree isn’t something someone should be afraid of, in fact it helps more than you would think. He talks to people who had taken out several thousands of dollars in student
Mark Kantrowitz indicates in his article, Why the Student Loan Crisis Is Even Worse Than People Think, that “Student loan debt is increasing because government grants and support for postsecondary education have failed to keep pace with increases in college costs”(Why 1). This means that the government no longer covers for college tuition fees. College graduates are 20% more likely to work at a job that is outside of their major by the debt they are in. Kantrowitz also mentions that “students who borrow to attend college, it appears that more than a quarter (27.2%) of them are graduating with excessive debt” (Why 1). In reality, leads to student saying that the financial cost was worthless, ending up with a job that is especially not what they went to school
One of the most common dreams of the student loan borrowers is, imagining themselves free from all the debts. This dream of yours can easily be fulfilled by opting for some effective ways to get your student loan debt forgiven.
Doyle states in his article, “As of this writing, the total amount of outstanding student loan debt has been estimated at $960 billion (Kantrowitz, 2011).” Right now, there is only 7.4 billion people on earth, but not all of those people are in debt. So, massive debt with not near enough people to even cover the debt on the whole planet put this issue into perspective. Many people talk about applying for scholarships but scholarships can only cover so much of the price, and even then, the scholarships aren’t guaranteed. Now what about paying off the loans? How will that take? “First, incomes vary tremendously across different choices of majors and professions. Second, the incomes of individuals starting out in the labor market vary according to the state of the labor market at that time.” There are many different factors that go into this process. As stated in the previous paragraph, those who do both work and school are more apt to pay their debt off at a quicker pace. But, how much they make and how often they paid is another contributing factor. If the average college student is making minimum wage (part time) and is going to an in
(Ramsey 108). Making sacrifices with your money now, will make your hole of debt that much less. The less you have to worry about debt, is the more you can focus on you. Around 30% of student loan borrowers have dropped out of college and have to continue paying the debt with just a high school graduate salary.
Student loan debt makes up a large portion of the debt in this country today. Many defaulted loans are the demise of high interest rates, poor resources to students in educating them on other avenues and corruption in the governmental departments that oversee education and financing. There are many contributing factors that lead to the inability to pay off student loans which need government reform to protect the borrower’s best interests.
It is a norm and expectation in society today for students to pursue higher education after graduating from high school. College tuition is on the rise, and a lot of students have difficulty paying for their tuitions. To pay for their tuitions, most students have to take out loans and at the end of four years, those students end up in debt. Student loan debts are at an all time high with so many people graduating from college, and having difficulties finding jobs in their career fields, so they have difficulties paying off their student loans and, they also don’t have a full understanding of the term of the loans and their options if they are unable to repay.
This debt accounts for six percent of our nation’s $16.7 trillion debt (Denhart). Since student loan debt is such a big part of the national debt, if the student defaults on their loan then the United States taxpayer has to carry the burden of the loan (Denhart). Students who are graduating with debt do have a couple of different options that they can choose from. There is a six-month grace period after graduation to allow the student time to find a job and programs to try to help eliminate debt. “The Consumer Financial Protection Bureau estimates that one-fourth of the American workforce may be eligible for repayment or loan forgiveness programs” (Atteberry, N.P.).
As of 2016, American students have accrued a massive 1.3 trillion in student loan debt. Just 10 years ago, the nation’s balance was only $447 billion (Clements). This ever-present cumulative burden has caused many post graduate Americans to delay important life events such as marriage, homeownership and children because of this substantial encumbrance (Clements). The debt will only continue to grow with neglect, so the most effective action to take would be eliminating the cost altogether.
The first solution to limit debt for a student is working and saving while attending school. Another solution includes attending a community college instead of,or before, a university. As a final solution, applying for scholarships can limit or diminish the amount of money needed to borrow, therefore, decreasing future debt. To start, one considerable solution to help with student debt is working and saving.
As people of many ages wish to further their education outside of high school, they tend to take out student loans in order to fulfill this wish since the large tuition payment is not in their budget. Paying for an education that presents a degree seems easy to many by taking out large loans to pay for their education. Recently, student loans have challenged the economy of Americans. Education is perceived as a necessary expense to many, in which they do not mind putting a burden on the economy for. Many people believe those loans can be paid off in a matter of a couple years. However, this idea is misguided as many people do not pay their student loans off until their early forties.
“About forty-one percent of borrowers fall behind on their student loan payments in the first five years of payment” (nytimes.com). Statistics also show that nearly thirty percent of student loan borrowers wind up dropping out of school. These facts help show that student loans are not a reward for you but are a burden. Student loans can be avoided by obtaining as many scholarships as possible, saving for college before you get there, and working to get money to pay cash for college.