Student Loans Essay Example

1.7 trillion dollars is a massive number which is a larger number than the gross domestic product of many countries. It’s enough to buy lands beyond comparison around all over the world, this much money can bring desert to life, barren lands to vegetation, poor countries can be bought with it.

And sadly, that’s how much UK college graduates need to pay as their student loans. To suggest that there is a student loan debt crisis is an understatement. Each year, about £20 billion is loaned to around 1.5 million students in England alone. At the end of March 2021, the total value of outstanding loans was £141 billion. By the middle of this century, the government estimates that outstanding debts would be worth roughly £560 billion (in 2019 values). The average debt among borrowers who completed their studies in 2020 was £45,000 on average. 

Student Loan Crises and “Middle Class” Students

Overall, we know that children from low-income families still have the most difficulty obtaining a college diploma. Even before student debt becomes a concern, unstable home life, lower-quality high schools, and other typical corollaries of low-income communities create a slew of challenges. The path to a degree appears to be easier for kids from middle-class households. Their families frequently have money set aside, and their schools and support systems have a strong track record of preparing them for the next step. Nonetheless, we've seen in the last year that middle-class kids graduate with the most student loan debt of any group.

Loan Debt an Economic Swamp

The negative impact on the economy is significant when graduates seeking their first post-college job are already $30,000 in debt. Despite their degrees, recent graduates are sometimes forced to accept lower-paying, lower-skill employment to begin repaying their student loans as soon as possible. As a result, graduates who are in debt typically miss out on the advantages of having a degree. According to ProgressNow, students who owe money on their loans are 36 percent less likely to buy a home, and other data suggests that “Those with student loan debt also are less likely to have taken out car loans. They have worse credit scores. They appear to be more likely to be living with their parents.” Student loan debt has the highest rate of defaults and delinquencies of any type of debt. While credit card default rates have fallen below 10% as a result of tighter lending restrictions, the rate of student loans in "severe delinquent" has increased to 11.5 percent.

Worse, many of these debtors aren't even graduating, according to Rohit Chopra of the Consumer Financial Protection Bureau. “This [statistic] suggests that borrowers who default are overwhelmingly non-completers … These borrowers take on some debt but do not benefit from the wage increase associated with a degree.”

Last but not least, the possibility of such massive debt is driving an increasing number of students, particularly low-income kids, to reconsider going to college – a decision that will exacerbate the already-looming scarcity of educated workers in the United States.

Current Situation of Students under Debt

Graduates reimburse the government for their school debts whenever their wages reach a certain level. As a result, these loans represent private contributions to the expense of higher education. The goal of the student loan system is to keep upfront expenses from deterring potential students. Graduates pay back their college debts and enjoy higher-than-average wages. Chancellor George Osborne indicated in his summer Budget 2015 that maintenance payments for new students would be phased out in 2016/17 and replaced by loans. He also announced talks on suspending the repayment threshold for five years, enabling some colleges to raise tuition by inflation beginning in 2017, and a reassessment of the discount rate used in loan accounting. These were the most significant changes in student aid since 2012.

When completely implemented, they will result in more money being loaned to students, both individually and collectively, as well as an increase in the amount reimbursed by medium and lower-income graduates.

Question: How can this Crisis be controlled?

Both the public and private sectors realize the scale of the student loan debt issue in the aftermath of the Great Recession. Several policy options are being considered; for example, federal legislation requires universities to disclose more detailed and comprehensive information about the cost of attendance, the risk of loan debt, and graduates' employment prospects, which is a significant step.

Universities are understanding the value of providing scholarships to students without lowering their financial assistance package. Take a look at this list of schools and institutions that have pledged to assist students to get the most out of their scholarship money. It's more important than ever for families to be informed of all of their financial alternatives. It's also critical to support non-repayable grants, scholarships, and other types of assistance. 

Scholarships and grants covered more than a quarter of the average college student's tuition cost in 2020, and the more we can all contribute to the increasing debt crisis numbers through scholarships and grants, the fewer students will add to the rising debt crisis statistics.