Student Debt

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Economic Growth with Student Debt (Analytical Paper)

From the media to the web, people have been deceived with the misconception that student debt is a major issue in our society solely because of those who take out loans to pursue degrees. The statistical data of outstanding student debt is deceiving because it generalizes every debtor rather than categorizing the people based on the different situations they are in. Student debt, in general, is viewed as an issue, but for others, the opportunity cost of student debt may benefit others in an ideal situation than those of other situations, which I will explain further on. Student loan debt accounts for $1.3 trillion of the total debt in the USA, according to The Economists report in 2014, …show more content…

With individuals who struggle and delay several expenses in their lives, inflation causes the Consumer Price Index to rise due to its rising prices of a particular service. Because inflation for tuition (CPI) rises faster than how much real income can adjust, the graduates expected nominal income would drop with a decreased purchasing power to pay off their outstanding debt. The rapid inflation of college tuition is due to the fact that financial aides have increased, therefore, colleges raise their prices because students will still continue to attend; they know that that the aggregate demand to attend college is rising. Taking advantage of this capitalist economy, colleges know that the US government subsidies college tuition, leading to an increase in tuition prices. To a majority of people in this society, college is becoming a necessity for their future, and it is undeniably difficult for people to make a living with a high school diploma. It may seem ideal that most students are full-time and not in the labor force, but the reality is that adults are working on their college degrees while they are in the labor force (employed or unemployed). “College is largely one of the best investments a young person can make,” (Thompson 2) but “we should worry about the single mother of two, going back to school in her …show more content…

The cost of student debt, in an economic perspective, highlights the crisis of the corruption in student debt, and leaves individuals with less than their expected outcomes. Increased income and a higher standard of living is supposedly the opportunity cost of going to college, but some people end up being afflicted by student loans. They become tormented by debt that will take time to pay off - giving up time and more than they have anticipated. Student debt has not only become a crisis for the economy but for the people who believe that college will help them find a better job.

Bibliography

Abel, Jaison R., and Richard Deitz. “The Value of a College Degree Liberty Street Economics.” Liberty Street Economics, Liberty Street Economics, 2 Sept. 2014, www.libertystreeteconomics.newyorkfed.org/2014/09/the-value-of-a-college-degree.html.

Berman, Jullian. “New York Fed warns of troubling consequence of rising student loan debt.” Marketwatch, Marketwatch, 1 Aug. 2016, www.marketwatch.com/story/new-york-fed-warns-of-troubling-consequence-of-rising-student-loan-debt-2016-08-01.

Clements, Nick. “The Real Student Loan Crisis: Debt-Fueled Tuition Inflation.” Forbes, Forbes, 8 Aug. 2016,

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