Ever crisis is a subject of increasing consideration, research,

Ever wonder is
college even worth it.  Everyone, if not
talking about it, has a least heard about the negative effect that the student
loan crisis has had and will continue to have. 
In the article “Student Loan Debt In 2017: A $13 Trillion Crisis” Zack
Friedman, the founder of Make Lemonade, states “there are more than 44 million
borrowers with $1.3 trillion in student loan debt in the U.S. alone,” and that
number is rising by the minute.  He goes
on to say that “the average student in the class of 2016 has $37,172 in student
loan debt.”  This realization is concerning to all
involved.  The article “It’s Time to
Broaden the Conversation About the Student Debt Crisis Beyond Rising Tuition
Cost”  _______ says “This student loan
debt crisis is a subject of increasing consideration, research, and analysis by
federal government agencies, non-profit organizations, economist, and the
students who carry the balance.”  The cost
for a college education keeps climbing higher and higher while financial
assistance has declined by 26 percent from the mid 1990’s and “the average
annual fee for a public college in the US is now $9,700, while private Ivy
League institutions command massive sums of almost $70,000.  This is in a county where median annual
salary is $50,000.”

The number of dropouts with federal loans at these
institutions has grown from the 35,443 in 2007-09 to more than 56,600 in 2013-15. Cite.  During that time the median student debt at
most schools almost doubled.  And most
students who leave school before graduation don’t make it back.  A study of the California State University
found that only 30 percent of students who drop out re-enroll at their original
college. 

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Tuition is not the
only reason for the student debt problem. 
So beyond cutting tuition, another fraction of the debt that needs to be
considered and controlled is the fact that students are also borrowing money
for cost of living and depending on the school, living expenses such as room
and board can easily amount to thousands of dollars more per year.  In an interesting article a Washington doctor
writes “First, I was 32 years old as I began training and I now had over
$230,000 in debt.  Had I invested my talents
in other pursuits such as law school, I would not have build up this level of
debt.  Also, as I did not start saving
when I was younger, financially speaking, I have lost the past 10 years without
the ability to save and invest to earn compounding interest.”  In another statistic Georgia’s public
colleges and universities between 2013 and 2015 108,000 students withdrew with
thousands of dollars in federal student debt but no degree.  “The numbers of students with school debt but
no degree is large enough that the financial impact goes beyond individual
struggles and weighs on the state’s economy.  Unless the current
condition is dealt with, the US will be left with many young people struggling
with the debt they are probably not going to be able to pay back, which will
result in a depleted economy.  The
generation that has to deal with the student loan bubble will have more than
half their salaries going towards student loans which means houses, cars etc.
aren’t being purchased.  It was also
revealed that by 2025, more than 60 percent of Georgia jobs will require some
kind of post-secondary education, and currently only 45 percent of the states
young adults meet that hiring requirements.  Students entering the work force are
realizing that there are no jobs in their fields, forcing them to take low
paying jobs but not making enough money to pay their loans.  Career choices, as well as achieving other
financial goals, such as saving for retirement are being negatively impacted by
the excessive amount of student debt. 
More and more students are experiencing depression at the uncertaintly
of their future.  I have seen this 1st
hand, my daughter still struggles with depression because she can’t afford to
pay her loans and live.    

According to the
article “The student loan bubble threatens to burst” Rachel Connolly states
that student loan debt in the US has shot up by over 170 percent in the past
decade.  This debt has grown primarily by
lenders who are lending money to 18 year old’s who have no financial knowledge,
no credit histoty and no reason to educate themselves on basic things like
interest rates, how the loan will get paid or the amount of time it will take
to repay the loan.  This unregulated
practice by lenders is being compared to the “global financial crash” by the
Business Editor of the Financial Times, Rana Foroohar.”

As a result, young
people like my son find themselves not being able to afford to live on their
own let alone buy a home, so he ended up moving back home with me.  Even worse, the domino effect this will have
on the economy should cause concern for all. 
Consumer spending will dimish and the US econonly will continue to be
substantially impacted by the increase in student debt.  Presently default rates for school loan are
at an all-time high, higher than those of credit cards, car notes and even
mortgages, all due to lenders collecting from students regardless of
salary.  Unfortunately, as well as
troubling, this the only kind of debt for which this is the case.  According to Donald M. Feuerstein in the
article “What is Driving the Student-Debt Crisis? He states, that “Twenty-seven
percent of loans in repayment are delinquent, and most of them are expected
ultimately to default, threatening hundreds of billions of dollars in taxpayer
losses and creating millions of financial basket cases for our consumer-based economy.”  Think about that how that will affect you!
Are you reminded of something?

Yes, there are
similarities to the housing bubble and the current student loan system: both involve
money easily lent to susceptivle borrowers to enable them to buy a product that
is quickly increasing in price, but with uncertain returns.  If this bubble burst, ther is going to be a
big mess, resulting in a lot of personal debt and lack of consumer
spending.  Change will have to be put in
place by policymakers and employers to carefully deflate the bubble.  Changes like the increased “student grants”,
financial aid, default rates, total reliance on federal aid, income-driven
repayment plans, lower interest rates and forgave unpaid balances at maturity”
were implemented without considering what effect this would have on the
economy.  These changeds might ease the
burden temporary but will not solve the problem.  In fact government funding might actually
driver spending, shifting the burden over to the tax payer.  Additionally, according to Feuerstein ” The
write-offs in IDRPs even fall outside the goverments 10-year budget-scoring
window, adding to the national debt without any fisical accountability.”

Although higher
education does open some doors to financial future the average income for
students once they’ve completed school has not kept up with the rising tution
cost.  Add to this the reduction in
government support, really leaves families no choice but to borrow more and
more money and even though students can obtain federal student loans faily easy
some students have chosen to get private loans in order to complete their
education not considering the ramificaitons such as variable rates, limitations
on deferment etc. that comes with going thru a private lender.  Nonetheless, as long as the thinking that
people with degrees should earn mor money that those without, school tuition
will keep increasing, lenders will keep lending and young people will continue
to pursue college education regardless of the risks associated with student
loans.  In the article Connally also
suggests that one possible fix would be how employers and society view degrees.  If employers can entice enough young people
away from the student debt trap by considering qualifications instead of, or as
important as college degrees than that would relieve some of the pressure
currently being felt by the economy or better yet the prevention of a total
crash.  Therefore, instead we need to
come up with real solutions to change the future of education and how it
impacts students, businesses and society. 
Several ideas running through my head would be to eliminate a lot of the
four-year degrees to a two year degree, the developmental of more employer
sponsored apprenticeship as well as a two year mandatory enrollment in some
kind of community service such as the military or Peace Corp all relating to
the desire field or career path.

Yes ultimately it
is the responsibility of the student to fully understand what is required and
fulfill the commitment made.  But we all
have contributed to the impending burst, therefore we all need to help find
solutions and ensure that this does not happen again.  Parents and students need to get educated so
that good decisions can be made on behalf of the student, lenders need to be held
accountable for their carelessness in loaning money out as well as questionable
lending practices and universities need to reform tution costs