Student Loan Debt Of The United States

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Student loan debt in the United States is expanding unrestricted each year. There are 36 million Americans today, holding over $740 billion dollars in student loan debt. (U.S. 2013) The current student loan system is intended to open doors to economic prosperity for those who could not otherwise afford to go to college. Research suggests that the unintended consequence of too much available student credit is real people losing prosperity and languishing in debt for extended periods of their lives. Reducing or eliminating the availability of student loans would have a tremendous impact on improving the lives of Americans. If things continue the way they are now, American’s will soon find college, and its implied ticket to economic…show more content…
Therefore, banks would not deem students worthy of very large loans, as there would be no basis for the bank to assess the risk of default. So the Government set up rules for itself. It created a system that students could get tremendous sums of money in loans. The Government then created laws that the student could never clear the loans through bankruptcy. This is important; students who cannot clear the loan will remain in debt forever until it is paid back. The National Center for Public Policy did a report that “suggest that there are some significant, negative, and lasting consequences of the current system of financing higher education in the United States, particularly for students from lower-income and lower-middle income families.” (Gladieux and Perna, n.d., 25) These consequences are seldom understood by the consumer until it is much too late. Most borrowers have no history or pretext with credit to understand the large sums of money they are accumulating in debt. So they have no way to fully realize how long it will take to repay a loan. The young student often does not understand how the interest on the loan can make a small loan grow if the student cannot repay the loan or has deferred payments. Worse yet, today’s students have no guarantee they will have economic prosperity to repay a loan. The students hardest hit by student loans are in fact the ones that never graduate.
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