I have heard many people suggest total student loan forgiveness. Of course, this sounds like a very easy way out especially because supporters of such a move have a clear illustration on how loan forgiveness will not impact the economy. I on the other hand beg to differ. I think that cancelling all student debt without any sort of payout to the creditors will result in economic catastrophe. Perhaps, it will even trigger another recession.
I suggest that these moneys be paid back but the payments should start out low and slowly rise over time. Of course, when you look at it, lower monthly payments mean you pay way more in interests. Many people shy away from this because no one wants to spend 30 years paying off a student loan. But let’s consider this; the principle of financial economics states that the period of payoff for any asset should compare to the period of the usefulness of that asset. When we look at education, its usefulness transcends the usefulness of a house for example. Home owners get up to 30 years paying off mortgage yet individuals have just 10 years to pay off thousands, if not hundreds of thousands in student loans.
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With a standard repayment period of 10 years, a lot of pressure goes into the wallet of the borrower. I propound a payroll withholding. Why should we prioritize repayment of student loan over accessibility to other very basic needs such as housing and food? Countries such as Australia and Sweden have students borrow the same amount of money for college as students in the US. But why we do not hear of the 1.4 Trillion headlines in such countries is because they have a realistic repayment period plan. Shorter repayment periods mean you can easily get into default. The consequence being credit score taking a hit and as such you can’t be able to buy a car to go to work. In fact, who will hire
Consumers would have more money to spend and jobs would be created, increasing the opportunities for countless Americans. The Student Loan Forgiveness Act of 2012 is the best strategy for forgiving student loans. Educated Americans would be given relief after a reasonable repayment period. Student debts have troubled far too many graduates and their families. It would only be morally correct to free their debts after a ten year period while concurrently aiding the economy.
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.
Even though choosing to go to college is something that takes a lot of thought, there’s still the idea of how to pay for it. That topic is touched by Robin Wilson in his article, “A Lifetime Of Student Debt? Not Likely.” In his article he talks about how taking out student loans isn’t as bad as it sounds. He argues that taking out student loans is something that you won’t notice in the future, they’ll just be like other bills that need to be paid. Most people who do have student loans, are still able to live a comfortable life, not scrabbling like most would
Garrahan, & John. (2014, May 02). Forgiving student loans won't fix crisis. Daily Journal Retrieved from http://search.proquest.com/docview/1520399845?accountid=27899
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
When you graduate from college that is the time you start your life but many are not able to. Some people want to get married or start a family but cannot afford it at the time. By the time they receive their first check they instantly have to start paying their loans back. They are not able to afford rent/mortgage, utilities, or transportation because of it. Mishory O’Sullivan and Invincible (2012), “Found the average single student debtor would have to pay close to half of his or her monthly income toward student loans and mortgage payments. As a result, he or she would not qualify for an FHA loan or many private loans” (Elliott). A Survey ASA did on college students stated, “Student Loans were created to be an engine for social mobility, but they are, in fact, limiting young people’s ability to achieve financial success” (The Impact of Student). A student graduate mentioned, “Student debt weighs on every decision I make from
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.
Analyzing all points of view, a great amount of individuals ask themselves why should the government forgive student debts. When our national debt is already sky-high, giving money away (forgiving) will only up the bill our country already has, according to Debt to the Penny (2014) our current debt today is $17,858,510,713,719.34. Another huge concern is the possibility of higher taxes! Government has to find a way to recover the money some way right? Why should the debt free individuals
Does the amount of student loan debt have an effect on the economy? If so would forgiving student loan debt help lower the national debt or would it just increase it? According to Mary Claire Fischer, a writer for Kiplinger’s Personal Finance magazine, “two-thirds of students who receive bachelor’s degrees leave college with an average debt of twenty-six thousand dollars” (Fischer). This means that the average student debt has doubled since 2007 (Ross 24). The total student loan debt is $1.2 trillion with $1 trillion being from federal student loans (Denhart). 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 tax payer 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.). The problem with these programs however, is that they are hard to get into and stick with.
It is not as simple as it sounds, student debt may go down, but how many other people are we putting in debt to make up for the loss of funding going to schools through the tuition that we have
So what do we do about these soaring prices of higher education? We can start from a plan of payment, which gives students enough time to pay their loans throughout the years keeping in mind whether that specific individual got a job following their degree. I myself am a student who attends an early college in hope of getting my associates without going in debt, and that’s another way debt can be taken care of. Finally, a kind of system can be created, where college also offers jobs or helps an individual find one after they have
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.
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.