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Impact of great depression on american economy
Impact of great depression on american economy
Impact of great depression on american economy
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In present 2016, with the presidential elections coming up, one of the talked about problems is student debt. The U.S. currently owes over 1 trillion dollars in student debt and it is growing by the second (Collegedebt.com). Tuition rates are over the roof and how these politicians plan to act upon them is one of the major deal breakers for this election. Yet as tuition rates keep on soaring, people are questioning, how and when did it become this bad? The answer is simply three factors: The Great Recession, Privatization, and lastly the need for higher education.
The Great Recession was a shocking surprise to the American population when we realized the abrupt and sheer deterioration of housing prices and unemployment rates (Fieldhouse).
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The post recovery was not as strong as it could have been, but due to the great help of Obama and Congress, we have managed to begin stabilizing the economy (Money.cnn.com). They implemented new policies like the American Recovery and Reinvestment Act which took out tax cuts in order to give help to troubled citizens and states, they also tried to balance the housing market, and reduce mortgage and foreclosure rates. The results were extremely positive as stated by Whitehouse.gov, “This all-out policy response has made a huge difference. Last Friday, we learned that real GDP…grew solidly for the third quarter in a row. Growth at an annual rate of 3.2 percent in the first quarter of 2010 is a dramatic turnaround from the decline of 6.4 percent that we had in the first quarter of last year. Likewise, in March we started adding jobs again. Employment rose by 160,000, and given the other data, we are hopeful that Friday’s April employment report will yield another positive reading.” Yet even though there was growth within the nation’s economy, the states were not getting enough money from the government and had to take out many budget cuts and one of the most affected budgets was the educational funds (Lumina 6). States would originally contribute reasonable amounts of money to schools and that would lead colleges and universities setting tuition rates lower due to most of the expenditures of housing/educating the student being already paid (Lumina 4). Later on as the Great Recession progressed, states were forced to cut down the budget thus making schools raise the price of higher education (Lumina
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.
... through the years after the Great Depression the Unites States staked a claim in the educational advancement of its citizenship in order to build a strong economy. However, unlike years past, public ownership and support of higher education has decreased in the face of growing inflation and the nations changing economy.
In the essays “College Debt: Necessary Evil or Ponzi Scheme?” by Dale Archer and “Forgive Student Loans?” by Richard Vedder, the authors show their varying viewpoints towards college debt. Archer’s essay focuses primarily on the correlation between higher education and college tuition, especially describing the upper education and its downsides for average graduates and average students. He also provides a simple alternative for financially burdened students to obtain certificates from trade schools as a better choice in today’s education that involves going into the workforce (Archer 402-04). Vedder’s essay, on the other hand, lists the numerous altercations about the student-loan industry. He rationalized his essay in a succinct manner that tells his general audience that forgiving student loans will bring financial burdens on the federal government (Vedder 405-07). Although, both writers addressed the issue
It can be argued that the economic hardships of the great recession began when interest rates were lowered by the Federal Reserve. This caused a bubble in the housing market. Housing prices plummeted, home prices plummeted, then thousands of borrowers could no longer afford to pay on their loans (Koba, 2011). The bubble forced banks to give out homes loans with unreasonably high risk rates. The response of the banks caused a decline in the amount of houses purchased and “a crisis involving mortgage loans and the financial securities built on them” (McConnell, 2012 p.479). The effect on the economy was catastrophic and caused a “pandemic” of foreclosures that effected tens of thousands home owners across the U.S. (Scaliger, 2013). The debt burden eventually became unsustainable and the U.S. crisis deepened as the long-term effect on bank loans would affect not only the housing market, but also the job market.
An education is one of the most important tools a person can acquire. It gives them the skills and abilities to obtain a job, earn a wage, and then use that wage to better their lives and the lives of their loved ones. However, due to the seemingly exponential increase in the costs of obtaining a college degree, students are either being driven away entirely from earning a degree or taking out student loans which cripple their financial prospects well after graduation. Without question, the increasing national student loan debt is one of the most pressing economic issues the United States is dealing with, as students who are debt ridden are not able to consume and invest in the economy. Therefore, many politicians and students are calling on the government to forgive their student loan debts so that through their spending the slowly recovering economy can finally return to its pre-2008 strength.
Employers consider a degree necessary for getting a job at their company. However, not many people can afford college. The solution is to take out loans, then college becomes affordable. These loans create a whole different issue, student loan debt. This can affect people their whole lifetime and has been happening for years upon years. But, in the more recent years America is starting to shed more light onto the issue and are becoming curious on why colleges charge twenty five thousand dollars, or more, for a year of education. Many different countries offer free college, but in America student loan debt keeps getting worse.
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.
Allan and Davis mention the spike of college cost since 1995 has increased by 150 percent; student debt has increased 300 percent since 2003, and with education, second to the mortgage industry in the nation’s debt, America needs to redirect their attention to the future and focus on education (Allan n. pg). Budget cuts from national to state
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.
Denhart, Chris. “How the $1.2 Trillion College Debt Crisis is Crippling Students, Parents, and the Economy.” Forbes. 7 Aug. 2013. Web. 13 Mar. 2015.
What caused the Great Recession that lasted from December 2007 to June 2009 in the United States? The United States a country with abundance of resources from jobs, education, money and power went from one day of economic balance to the next suffering major dimensions crisis. According to the Economic Policy Institute, it all began in 2007 from the credit crisis, which resulted in an 8 trillion dollar housing bubble (n.d.). This said by Economist analysts to attributed to the collapse in the United States. Even today, strong debates continue over major issues caused by the Great Recession in part over the accommodative federal monetary and fiscal policy (Economic Policy Institute, 2013). The Great Recession of 2007 – 2009 enlarges the longest financial crisis since the Great Depression of 1929 – 1932 that damaged the economy.
With the ever-increasing tuition and ever-tighten federal student aid, the number of students relying on student loan to fund a college education hits a historical peak. According to a survey conducted by an independent and nonprofit organization, two-thirds of college seniors graduated with loans in 2010, and each of them carried an average of $25,250 in debt. (Reed et. al., par. 2). My research question will focus on the profound effect of education debt on American college graduates’ lives, and my thesis statement will concentrate on the view that the education policymakers should improve financial aid programs and minimize the risks and adverse consequences of student loan borrowing.
As colleges’ funds dry up, colleges must turn to the public to further support higher education. By raising state taxes, colleges can collect funds to help improve the school’s budgets. The state provides funds from the taxes for colleges to receive a certain amount for each student currently enrolled. All community and traditional four year colleges collect these funds in order to maintain the school’s budget. As reporter, Eric Kelderman states, “less than a third of colleges’ budget is based from state taxes”. The school’s budget is how colleges are able to provide academic support programs, an affordable intuition, and hire more counselors. Colleges must now depend on state taxes more than ever for public colleges. Without collecting more funds from state taxes, as author, Scott Carlson explains how Mr. Poshard explains to senators “our public universities are moving quickly toward becoming private universities…affordable only to those who have the economic wherewithal to them” (qtd. in.) Public colleges must be affordable to anyone who wishes to attend. If colleges lack to provide this to students, it can affect dropouts, a student’s ability focus, and cause stress. The problem of lack of funding is that colleges have insufficient funds. Therefore, the best possible solution for the problem of lack of funding would be increasing and collecting more funds from state taxes.
In that year, the number of college graduates was only 432,058 (Sourmaidis) and ever since the demand continually increased as did price. This trend allowed for the student loan crisis to occur, which is a problem we face today. 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 federal government must do more to reign in tuition costs at the public colleges, that educate more than 70 percent of the nation’s students. The cost of four-year public college tuition has tripled since the 1980s, outpacing both inflation and family income. The increase in the tuition burden is largely caused by declining sta...