Student Loan Crisis

Federal Student Loan Crisis

Introduction

The student loan crisis in America has recently reached its peak with 1.3 trillion dollars in outstanding student loan debt (Barrett & Dickler). Tuition is not only growing at a rate faster than inflation but more students are also pursuing a postsecondary education (Houle). These students include individuals from all income levels, so those unable to afford tuition are forced to take out student loans to make up the difference. This problem directly impacts the 40 million Americans who have taken out these loans; however, more people are affected than just those in debt (Franken). Student loan debt influences major life decisions such as starting a family, buying a house, and retiring. Beyond the individual problems debt creates, this crisis is impacting the economy, politics, and the nation as a whole; therefore, if the student loan debt crisis is not rectified, the well-being of America will be negatively affected.

Historical Influence

In 1965, American president Lyndon B. Johnson introduced the Higher Education Act. For the first time, this enabled the average student to obtain financial aid, scholarships, and low interest loans through the federal

government (Hannah). According to The Journal of Higher Education at Ohio State University, previously, the National Defense Education Act of 1958 only provided loans to World War II veterans studying science (Hannah). Because more people had access to financial aid and loans, the amount of money given by the federal government greatly increased. As the use of student loans to finance higher education became more popular throughout the years, the amount of student loan debt in America rose as well. According to U.S. News and World Report, college tuition has risen 56% between 2004 and 2014 (Camera). This has forced a greater amount of people to take out loans, specifically federal student loans, which currently make up 75% of all student loans in America according to the executive director of Western Interstate Commission for Higher Education (Longanecker). The cost of attending a university and the number of students pursuing a higher education has increased. Both of these factors have lead to the growth of the student loan debt problem.
Family Background
The decision to attend college is based on many background factors such as socioeconomic status, race, and ethnicity. Socioeconomic status, one’s economic and social position within society, is based on income and education level. Each level of income faces its own unique challenges. As stated by Mark Huelsman, a policy analyst with a Master of Education in international education policy from Harvard University, students from lower income households have a college dropout rate of 38% (Huelsman).These individuals struggle to pay off student loans because they lack the higher income that is associated with a postsecondary degree. Research conducted by the American Sociological Association found that middle income students are prone to acquiring a disproportional amount of student loan debt (Houle). These individuals do not qualify for large student aid packages; however, they lack sufficient funds to finance themselves alone. Students from the final and highest income level typically come from more educated parents and tend to feel more pressure to be successful in school (Houle). This pressure causes more of these individuals to further their education by pursuing a postsecondary education.
The education levels of a student’s parents can greatly impact whether or not he or she attends college. In the event one chooses to pursue higher education, his or her parents can help guide the financial side of the process. Parents who have attended college have more cultural capital compared to those who did not go to college (Houle). They possess more knowledge about financial aid and other ways of promoting success. Their personal experience with college can help them make wise decisions about the financial aspect of attending a university and can help reduce some unnecessary expenses.
The amount of student loan debt acquired is also influenced by race and ethnicity.

For example, African Americans have approximately 51% more debt than Caucasians (Houle). Many of these students fall under the low income category and consequently are more likely to need student loans to pay for tuition. Although they would qualify for more financial aid than Caucasians, numerous of them are unaware of the process. Latinos, on the other hand, typically borrow less money to finance postsecondary education (Huelsman). Due to an adverse attitude towards loans, they try to pay for college themselves by working multiple jobs and attending less expensive schools. Specific individuals have a higher chance of accumulating more student loan debt due to their cultural

circumstances.