It’s no secret that the cost of higher education has skyrocketed. Many students have no choice but to take on loans if they want to pursue their career dreams. Student loan debt in the United States is now at a staggering $1.77 trillion dollars according to the Federal Reserve. The Federal Government is the largest lender to students, holding more than 92% of all student loans.
There are several contributing factors to the risings costs of college and the subsequent accumulated student loan debt; and while President Joe Biden and the Department of Education have been working overtime to offer student loan relief, forgiving billions in current student loan debt and making future debt more manageable, no one has stopped to ask the colleges and universities to take accountability for their role in this crisis.
The Student Loan Debt Crisis
Each year the cost of college seems to be climbing higher and higher. In fact, over the last few decades the cost of college has exploded, jumping 65% since 2000 with the average student owing more than $37,000 in student loan debt. That’s quite a sum to start out life with, eclipsing all other types of debt except for mortgage related debt.
The Department of Education Federal Direct Loan program m will loan up to $31,000 in federal student loans to dependent undergraduate students studying at qualified colleges and universities regardless of credit history. Young adults are taking on excessive amounts of debt under the impression that upon graduation they will find employment that will pay them well enough to not only repay the debt but to also live a comfortable life. According to the countless video rants on sites like TikTok, this doesn’t seem to be the case for a number of students who find themselves struggling financially and disillusioned that they could be led so far astray from their dreams.
The Value of a Degree
Many are beginning to question the value of a college degree given the high cost required to obtain it. Statistics still how that having a bachelors degree will garner more lifetime wages than those without one . However, prospective students would be wise to research specific earning potential for their desired career path and weigh that against the cost of attendance at the school they intend to attend to fully comprehend what post-graduation life will be like for them financially.
Who Should be Responsible for What:
When considering the student debt crisis there are several groups involved: students and parents, lenders of student loans, and colleges and universities. All should accept some ownership for their role.
Students and Parents:
It can be easy to get caught up in the admissions process, focusing more on the school instead of the cost, applying to reach, target and safety schools . Practicality typically prevails for safety schools but prudence gives way to prestige for some target and surely many reach schools. A coveted acceptance letter to a school thought to be a dream could derail all plans to minimize costs in favor of unique opportunity.
What’s often overlooked is what it takes to truly thrive in college. Some students simply are not ready or have not determined yet what they truly want to do causing a great many to drop out. Nearly 1 in 4 first-year students will dropout and about 40% of all undergraduates never make it to commencement day. The loans leave school early with the students, who now have less earning potential and more debt.
There are also situations when chosen majors are in fields or industries that simply don’t produce the kind of income required to repay student loans. In these instances, it would have been wiser to forego a 4-year college for possibly a certificate program or even work experience to keep student debt at bay.
Lenders of Student Loans:
Private student loan lenders account for less than 10% of all student loan debt and that is likely due to the fact that they are not as easy to get as federal student loans. Students much show an ability to repay the loan or produce a cosigner to get approved for a loan.
Whereas federal student loans, in an attempt to make education available to everyone, will typically lend to anyone meeting their basic eligibility requirements. These include: filling out the FAFSA®, being a U.S. citizen or eligible non-citizen, and enrolled in an eligible degree or certificate program at an eligible college or career/trade school, among other requirements. Proven ability to repay is not a factor for independent undergraduate students to receive a federal student loans.
While the Department is Education is creating programs to forgive or help repay loans, these programs negate the fact that lending to financially naïve young adults is cause for concern. Entrance counseling is required of each borrower, however many will gloss over this process as it’s not very comprehensive. Without proper education on what it means to take on debt and how to plan for repayment, students will never fully grasp the gravity of what they are taking on, and as such find themselves saddled with debt that they are unsure how to they will repay.
Colleges and Universities:
While the students who borrow and the lenders who lend certainly bear a greater burden of responsibility for student loan debt, colleges and universities should be held accountable for some part of this situation as well. Aggressive marketing campaigns to lure students to campus’s filled with resort like amenities, frivolous majors and programs designed to extend the time it takes to graduate capped off by lack luster college job placement programs – all of which do nothing but encourage more debt and a diminished ability to repay it.
For students taking on tens of thousands of student loan debt to attend college, schools should be required to guarantee their product to some extent or offer a refund of sorts. If compelled to be reasonably accountable for some portion of a student’s (i.e their products) success, they might be more inclined to ensure that programs offered are relevant and yield sufficient wages to repay the cost of the degree. They might not embellish campuses with costly amenities that need to be recouped via higher tuition costs. And they certainly would work harder to help position graduates for gainful employment and financial stability. All of which would surely help to reduce stress of student loan debt on students.