The student loan system needs help
By Taylor Milam
Paying for college is a standard “hot button issue.” While there are programs available to reduce the burden of higher education loans, 60 percent of college students will borrow annually in order to cover the costs, based on statistics from the Chronicle of Higher Education. According to the Consumer Finance Protection Bureau, this means that there is over $1 trillion in outstanding student loan debt.
So what does this mean for students? It means that it’s almost impossible to graduate from a four-year institution without some sort of debt.
In fact, according to the Federal Reserve Bank of New York, the average loan balance for all age groups is $24,301. However, loans begin incurring interest as soon as six months after graduation.
While it seems obvious that the current system of paying for higher education isn’t working for the government or the students, it’s important to note that it is a burden on parents as well.
The most common way parents are negatively affected is through the PLUS loan. The parent of a student, in the parent’s name, takes out the PLUS loan. Even after graduation, the loan cannot be transferred to the student. This means that the parent is solely responsible for paying back the loan.
Caitlyn Benjamin, a junior double major in international relations and psychology, explains that it’s difficult to watch her parents struggle with debt on her behalf.
“At the end of the day it’s my loan, but I can’t even pay it back myself,” said Benjamin. “[This system] puts the stress on my parents.”
The problem of parents taking loans for their children’s education is that current college students will one day find themselves in the exact same situation. It has become an endless cycle of debt, repayment and more debt.
The American government is currently facing countless financial problems. The problem of rising education costs, increased student loans and parents entering into debt for their children could be argued as unimportant in comparison.
However, Benjamin explains that if we don’t deal with it now, then we are merely prolonging the problem because it will have to be dealt with in the future.
“It’s not necessarily the most important problem, but if we don’t deal with it now, we’ll have to deal with it later,” said Benjamin. “It will affect the next leaders of our country.”
Perhaps America could take a lesson from Europe. In Norway, education costs approximately 500 Norwegian Krones each semester; this is equivalent to a mere $87. The Norwegian government pays for the rest of the fees.
In England, university costs are more comparable to those in America, but loans do not begin to be repaid until graduates are earning above £15,000 a year.
This means that if a student graduates and is unemployed, they are not burdened with the prospect of finding a job and making payments on loans. In addition, the British government absorbs loans if they are not repaid after 25 years. Maybe America could learn a thing or two from her neighbors across the pond or in Scandinavia.