Student loans, also often called student debts, are financial aids in a loan form that requires borrowers to repay in the future (Wikipedia). Usually, student loans mean to provide students with financial issues the opportunity to obtain a college degree, which leads to an average lifetime income increase of $1.13 million for men and $792,000 for women (University of Kansas 1). As student loan aims at helping people live a better life, many college students exhibit negative attitudes towards interest rate of student debt, which is considered being too high, and debt issuers and the market are believed as the cause of high interest rate. Is it really true that student loans are tools of capitalists to rip off every penny from students? What factors exactly determine the rate of student loan?
In fact, more than 90% of outstanding student loans are federal loans issued by the government, United States Department of Education, and therefore, their rates are determined by federal laws. According to the Bipartisan Student Loan Certainty Act passed in August 2013, federal student debt rate should be reset annually based on 10-year Treasury Note rate with a fixed margin in addition. For 2016-2017 academic year, standard 10-year federal undergraduate student loan rate is 3.76% and the graduate loan rate is 5.31%, according to U.S. Department of Education.
In contrast, student loan issued by private institutions has considerably higher rate. For example, the starting rate for
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Matt Taibbi argues in his Rolling Stone article titled “Ripping Off America: The College-Loan Scandal” that the government is the primary source to blame for today’s appalling inflation rates on increasing student debt. Additionally, he argues that the reason the tuition is so exploitative and unfair, is because it was created to benefit two groups. The first being, “…colleges and universities, and the contractors who build their extravagant athletic complexes, hotel-like dormitories and God knows what other campus embellishments” (Taibbi). Next up, the other group that gains from the current system is the government. This is because, “…the government actually stands to make an enormous profit on the president 's new federal student-loan system, an estimated $184 billion over 10 years” (Taibbi). Further, Taibbi goes onto to state that students often have no idea what they are signing up for with student loans, because not all students have access to the same information. Finally, Taibbi mentioned that “because of the poor job market, young people may have less of a chance than ever to actually get a good job commensurate with their education” (Taibbi). This means that with no degree, students have no chance, but with a degree you are forced down a road of high risk, and at the end you are likely to be left with a ton of debt.
This is a great help for those who may not be able to afford money to pay for the classes in college. Private student loans allows those students to be able to pay for the classes using that money. When graduation time comes students will be able to have up to $500 to repay that money. It also help students get the education they want and need without having to worry about the cost. Because private student loans already has it covered. Although private student loans are offered in some schools it doesn’t take away the fact that it is extremely
A problem with student loan debt is that students gain more debt because they are not able to pay off the student loans within the given time which also causes them to put certain life decisions on hold. According to Sophie Quinton debt is a problem for the recent college graduates because “There’s currently no way to get rid of federal student debt other than paying off the loans. while some borrowers are paying off their debts just fine, overall they are adding debt faster than they are shedding it”(Quinton). According to Jamaal Abdul-Alim stated that a “survey - titled Student Loan Debt: Who’s Paying the Price?- revealed a number of troubling statistics about the practical ways that student loans are impacting college graduates in their everyday lives. For instance the survey found that: 49
Say you spent four years as an undergrad and six years in graduate school. That means you're paying student loans at ten interest rates. Depending on when you got the loans, there's a good chance that some of those rates are higher than the current going rate.
A retrospective look might provide a clue as to how so many Americans landed in the whole “student loan” dilemma in the first place. As discussed in the America article “The Student Debt Crisis” as part of the plan to create a ‘Great Society’ President Lyndon B. Johnson signed into law The Higher Education Act of 1965. The act provided more funding to public colleges and universities, giving them more resources so that students would be able to afford college. Hence, the birth of the student loan (2015).
Students are taken advantage of with student loans. Most students cannot afford to go to college and turn to student loans. Usually this is a combination of the students, parents, and financial aids ideas and problem solving in order to afford the schooling at the university or college of choice. The student is the one who signs the agreement that they will pay off the loan. Most students do not read the booklet that you have to read before signing, and most also do not read the small print. Both of these pieces of literature include the interest rates that constitute the bill that the student will have to pay in the future. Students do not read these because they are just so excited to be able to go to college and not have to worry about paying all of it during their schooling.
A great deal of students turn to college loans to help pay for their many college expenses. A study conducted by CNBC displayed that 59 percent of student’s graduation from a public four-year institution had student loans. After graduation many students found themselves under “student loan pressure”- meaning it will take years of them working in order to pay the debt. Students will invest thousands of dollars towards tuition, housing and textbooks and may be paying the school back for years following their graduation.
The student loan is not a myth. The student loan is amount of money that a student borrows from a bank to pay for their college education. However, paying back the loan is not easy; therefore, student loans have become a crisis. The student loan crisis is not a myth because students cannot afford to pay for their education, college students are struggling to pay back their loans, and college education has gotten expensive over the years.
In fact, in the past, even if you were a college graduate, you were considered to be in the minority of the society; however, today, a college degree is fundamentally a requirement for any majority of careers. As the need for a college degree increased, the less affordable it became, therefore, student loans became a must. Although student loans do help students with a higher education, they can also get those individuals into tons of debt. Even though we can all benefit from a college education, the future looks pretty barren for those with student loans. The future of college tuition, and in another word, student loan; seems to be going only up with no release in sight. In order to get a better understanding of why, this might be a good time to look back at when the first federal student loan and grant programs were established and how it has fueled the rising tuition costs.
Student loan debt now averages nearly $33,000 per student, and almost 70 percent of students take out student loans. The student loan industry, with over $1.2 trillion in outstanding loans, is now competing with the mortgage industry for the number one spot in highest consumer debt. In fact, many 30-somethings, nearly a decade after college, are still having to choose between buying a home and paying off their student loans.
Student loan debt is a debt that students allow to build up and mess up their credit for not paying it back. Student loan debt can be fixed with repayment plans that the student decides will be good for them. Student loan debt came about in 2006 and has been rising higher every year since. Student loan debt is called the gift that keeps on giving. In reality it does not keep giving the student allows other debts to come along making the first debt have more interest and become more expensive than it already was. Student loan debt also comes from the type of school the student decides to choose ("U.S. Student Loan Debt Statistics for 2018”). Whether the school is private or public the debt is tremendous if not
Throughout the United States, student loans have been show to drag this economy down. Student loans have been a big problem through many of the years. It has been showing a trend and it is raising and exceeding many of the debt types each year. Many problems that students that have loans cause are, “ 20 percent of respondents indicated they cannot get a loan for other items, are unable to purchase a home, and student loan debt negatively impacts their credit. 18 percent of individuals indicated they are living paycheck to paycheck, “drowning” in debt, and have a large debt load. 13 percent indicated they have a lower quality of life and are unable to afford the extra things. 12 percent indicated they are unable to save for their retirement or their children’s education and feel less secure.” Students that have
Statics show that just in the past 10 years (2005-2015), the average student debt accumulated by college graduates has risen nearly 325%. Student loan debt is incredibly dangerous for not only personal finances, but also for the total economy of the country. Most student loan payment plans place borrowers in a 20 to 30 year payment plan. Unfortunately meaning most borrowers will be paying off these loans even after their