Research

            Student loans are a huge problem, which is still growing, for students all across the

United States. Students who take the loans are not only going to deal with them throughout

their college career, but for many years after they have achieved their degree and have

gone out into the workforce. Without the proper fixes they are only going to get worse.

Student loan debt, of both federal and private student loans, rose to over $800 billion in

June of 2010 (Avery, Turner, pg. 165). This number has risen over the time since then, and

it continues to rise. Today, the “student loan debt is over 1.2 trillion dollars” (Avery,

Turner, pg. 165). That’s a multiplication of 1.5 times since 2010. The average tuition for a

university in the United States today, including public, private, for-profit, and non-profit

universities, is about $26,000 (Avery, Turner, pg. 165). Most students and their families are

not able to pay this as the student goes through college. What do they do? They need to

borrow the needed money. This is what leads to students to loans.

            Attending, going all the way through, and finishing college is one of the most

expensive things that any one single person can do. Many students believe that it ill not

affect them and they will be able to pay it off with ease later in life. They are incorrect. This

is not saying that you should not take out loans by any means. It is only saying that if you

do decide to take out loans, make sure that you are smart about it. These loans will follow

you until paid. Student loans have been similar over time, not much has changed about

them for years, and the numbers that have risen are tuitions and the total amount owed.

Student loans are not all bad, they are “often considered to be the best kind of debt to have”

(Bozick, Estacion, pg. 1866). Student loans normally have low interest rates. The interest

rates normally average about 4.66 percent (Bozick, Estacion, pg. 1866). This is an increase

from the previous years 3.86 percent (Bozick, Estacion, pg. 1867). A main part of the issue

is that there are many students who have fallen into debt without diploma, meaning that

they have not finished or decided that they are not continuing college and still have student

loans that they are faced with. These individuals most likely do not have the right assets to

start repaying these loans.

 

            The student loan debt problem affects people as they are going though college and

for many years after. An article from The Huffington Post states that “an associate's degree

on average take 18.3 years to pay off their debt, compared with 19.7 years for those with a

bachelor's degree and 23 years for those with a graduate degree” and people aged “30 or

older who were currently repaying college loans were twice as likely to rent rather than

own a home than those who already paid them off” (Kingkade). Even 15% of graduates are

still paying them off when they turn 50 years old. Take a look at these numbers. The

average amount of time it takes for a person to pay off a student loan is about 20 years.

This will put most people close to the age of 40 before their loans are paid off. These

payments are difficult to keep up with when the students enter the workforce for the first

time. At this time, these people are normally making the smallest amount that they ever

will in their career. At this point the loans are sometimes seen as not payable.

Student loans are also proven to have an influence on the point in life that the

graduate decides to get married. According to Robert Bozick, and Angela Estacion they

“find that the dynamics of loan repayment are related to marriage timing … Specifically, an

increase of $1,000 in student loan debt is associated with a reduction in the odds of first

marriage by 2 percent a month among female bachelor degree recipients during the first

four years after college graduation. This relationship attenuates over time” (pg. 1865). The

loans are delaying these students from getting married. Why? Because they already owe

back a large sum of money. This relates back to the fact that graduates who are over the age

of 30 are more likely to be renting a house and paying off the loans than buying their own

house. These loans start to restrict the person’s way of life.

            How do we solve this problem? Is this problem even able to be solved? It is not

going to be easy to have every person who owes back on their student loans to pay them

off; again, the total owed is over 1.2 trillion dollars. There are, however, payment plans that

could be used to create a steady system in which graduates could start to pay back what is

owed. There are two types of plans “conventional mortgage-type loan and income

contingent loan” (Shen, pg. 45). Both plans have their own advantages and disadvantages.

First, look at the conventional mortgage-type loan. “The conventional mortgage-type

student loan has been most commonly adopted by many countries” (Shen, pg.45). The main

advantage of this plan is that it has a set payment amount for a set amount of time. This is

both good and bad because there is no lookout to any sort of future income. Now for the

other plan; the income convergent loan. A huge upside to this plan is that it is readily

available to every person. You do not have to qualify for it. This plan does however look at

future income and set up the plan accordingly. If you are qualified to get a high salary job,

this plan will make it easier for you to pay off your debt faster and with more efficiency.

Both payment plans would do well if used in our society, yet they each have their own

separate flaws.

            Another solution is to stop it before it starts. This means to do what it takes to be

sure that students do not have to take out a large sun of money in loans. How? Scholarships

need to be even more ready available than they already are. Scholarships already arevery

helpful and very much existent, all which needs to happen, is for people to make sure that

the scholarships are known about and we are sure that they are taken advantage of. Too

many students go straight into college without any form of scholarship. A scholarship can

be huge for college students and will help avoid student loan debt. Also there are many

students who go in to college undecided and take classes that are unneeded. Or they go in

and change their major three, four, or even five times. They are not only wasting their time

in classes that will do them no good, but they are paying for them as well. “You can’t flip a

college degree the way you can flip a stock, or even a home” (Avery, Turner, pg. 165). This

means once you have your degree, you cannot just trade it away, or sell it off. It’s yours; you

must make the wise choice. There are many students who have graduated college and are

working a job that does not require a degree or that does not require the degree that they

have achieved. They still have to pay off the loans even if they are not actively using the

degree. If students are more informed and go into college with a set plan and they are ready

to work hard for the next years to come, they will not be wasting any time or money.

Another way is to just go to a cheaper college. Start off your college career at a

smaller community college. Take all of your easier prerequisites for smaller prices and then

move on to a bigger university to study your final, more important, classes. To compare the

average tuition of a community college to the average tuition of a university, you are

looking at about a $5,000 dollar difference. A two-year tuition for a public community

college is averaged at $2,713, while the average for a four-year tuition far a university is

$7,605. These numbers are only for one of the years. That brings the total difference to

$20,000. This is a huge sum of money for a person to just waste taking classes that they

could be taking for cheaper and getting a similar education. Information is key in solving

the issue of student loan debt; students need to be informed correctly. This related to

making the wise choice. How does a person make the wise choice? They will make the wise

choice if they are informed correctly. This is why information is key. The correct

information brings the correct choice. The corect choice brings lower loans. Lowering

student loans is what we want in the end.

            “In public universities, 62% of students graduated with some kind of debt: that

number was 72% at private universities, and at the increasingly popular for-profit

universities – where tuition rates are among the highest in the nation – it was a whopping

96%” (Grant, pg. 819). Between 62% and 96% of graduates are graduating with some kind

of loan. That’s a huge percentage, it is well over half and almost close to one hundred

percent. Not only are they graduating with debt, but also they are being weighed down by

it. The debt will stay with them until paid off, which can last many years. Student loan debt

is a huge problem in the United States. It is up to us to be sure to inform the students of the

correct information before they go blindly into college. Again, student loans are not a

horrible thing to have. They can become out of control if not taken care of properly. So, this

brings the question, are we able to pay off over 1.2 trillion dollars? Even while it is still

rising? The correct answer is: yes, of course we can, we just need to enact the right plans

and stick with them in order to make it happen.

Works Cited

Avery, Christopher, and Sarah Turner. "Student Loans: Do College Students

            Borrow Too Much--Or Not enough?" The Journal of Economic

            Perspectives 26.1 (2012): 165-92. ProQuest. Web. 23 Nov. 2014.

Bozick, Robert, and Angela Estacion. "Do Student Loans Delay Marriage? Debt

            Repayment and Family Formation in Young Adulthood." Demographic

            Research 30 (2014): 1865-91. ProQuest. Web. 23 Nov. 2014.

Grant, Kyle L. "Student Loans in Bankruptcy and the "Undue Hardships"

            Exception: Who should Foot the Bill?" Brigham Young University Law

            Review 2011.3 (2011): 819-47. ProQuest. Web. 23 Nov. 20.

Kingkade, Tyler. "Student Debt Repayment Causes Concern Among Many

            Borrowers." The Huffington Post. TheHuffingtonPost.com, 26 June 2013.

            Web. 24 Nov. 2014.

            <http://www.huffingtonpost.com/2013/06/26/student-debt-

            repayment_n_3500251.html>.

Shen, Hua. "Advantages and Disadvantages of Student Loans Repayment

            Patterns." International Education Studies 3.1 (2010): 45-9. ProQuest.

            Web. 23 Nov. 2014.