Majority of college students today are paying for their education through student loans, which puts more danger on them (us). Not only does a student loan put an individual in more of risk and set back, they also have negative social and economic effects that range outside of college campuses. These student loans follow you for life, until they are eventually paid off.

For example, student loans are meant to increase college access to a much larger population and give everyone an opportunity but the thought of being in jeopardy by taking out student loans makes individuals second-guess their desire and need to attend college. It has been found that low- and middle-income students worry about the penalties of taking out a loan and ultimately decide that going to college is not worth this risk. Student loans were intended as a method and a way to expand education, but is this actually happening?

According to Sociologists Rachel Dwyer, Laura McLoud, and Randy Hodson: “There is a certain irony that those who were expected to benefit most from expanded college access are also most vulnerable to the risks of carrying too much debt.”

I find this quote to be true and stand by this. In our society today, a college degree is most likely needed in order to pursue a good career. But in order to get to that great good paying career, individuals need a Bachelors degree and majority of the times even more than that. Ultimately, individuals then need to take out more loans to put themselves through Grad school, to even be considered as a good candidate for a job. The thought of paying off student loans for the rest of your life makes individuals second-guess and reconsider if attending college is worth it. College students are being scared away, even before they begin school.

As stated in the article, “Studies have found that high debt levels not only deter access at the beginning, but can also drive students away from completing college once they have already started.”

Today, it is more common to see students who start college and then do not graduate eventually being stuck with loan repayments and no college degree. I find this happening more and more with our society today. Students are getting fed up and start facing the risk of their student loans adding up, making them drop out of school. These students still have to repay their loans but do not have the economic enhancement of a college degree to help them have enough income to cover this cost.

Going off of this, there is a second issue with student loans and its effect on our economy. Having to pay off student loans makes individuals less likely to spend their money on other things. For example, students that have more student loan debt are less likely than individuals without student loan debt to purchase things such as homes or cars. This is just more evidence that high debt levels are a strain on economic growth.

Throughout the past few years, households have lowered their overall debt except for student loans. The data presented in the article, suggests, “that student loans have slowed down households in the process of paying down debt.” Student loans keeps growing at a faster rate each and every year.

The problem of debt is spread all throughout the income ladder. “Nearly 70 percent of all college graduates with a bachelor’s degree from a public institution have student loan debt.” This is insane and students need to take out loans in order to receive a degree that will get them a career. Students and more so low-income students have to rely on loans to pay for school.

According to data from the Department of Education “44% of all dependent undergraduate students in 2012 from families with less than $30,000 in income had student loan debt levels of more than $12,400. For middle class families (defined here as families with incomes between $30,000 and $106,000), well over half of students had debt at $12,400 or higher.” No matter your socioeconomic status, you are more than likely to be in some kind of student loan debt.

Overall, I believe that student loan debt affects household spending within the economy. The less money that is being spent in our society is creating less money cycling around the economy. People are choosing to spend less and also do not have a choice due to having to pay off debt. In order for the economy to keep going round, we need individuals to spend money and because of paying off student loans, people are not spending as much. “As student loan levels continue to pile up for students of all incomes, the burden of interest payments in addition to paying back the principal of the loans will serve to constrain the economy even more.” Also, student loans do not play a part or taken into account in the cost budgets at universities and colleges, ultimately creating a sequence: loans allow colleges and universities to raise tuition, which then makes more students take out loans and become more even more in debt. Students are more worried about their debt then finding a career and with the rise of college costs, it seems that getting a good job will be nearly impossible in the future.

Are you one of these individuals, who are racking up student loans?

 

http://www.forbes.com/sites/joshfreedman/2014/02/11/student-loans-are-a-big-drag-on-the-economy-and-society/

One comment on “Student Loans… Are They That Great?

  • I think student loans are definitely one of those things that is a double edged sword. It allows people who may not have otherwise had access to college the opportunity to better their education, but that comes with a big cost for some people and little benefit. Many people take out thousands of dollars worth of student debt that they end up going their entire lives paying off. It doesn’t make sense that we should need to be in debt to get a job. Also, just because we pay for degrees that doesn’t even guarantee us a great job. My sister graduated from an Ivy League university with $35,000 worth of debt and her degree isn’t even necessarily worth more to a company than someone who went to a regular university. Paying more for an education doesn’t necessarily guarantee a better job or more of an opportunity. If we were at least given more opportunities for the debt we had it would make more sense, but it doesn’t work that way. Of course the amount of debt many of us accumulate will effect our credit and also the way we spend our money which has an adverse effect on the economy. I think many of us are thankful for the opportunity to have a way to gain an education, but for many people, it’s just not worth taking on the extra debt. I think this raises questions about how to lower tuition costs for public colleges and think about how it would be beneficial to students but also to the economy.

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