Description of the Social Problem: Student Debt in America:
The total outstanding amount of student loan debt in the US amounts to $ 1.2 Trillion. This is an astoundingly high amount of debt that not only directly affects the indebted students, but also has an effect on the economy of the country as whole, as well as the soundness of the fiscal system. There were around 37 million student credit borrowers with exceptional understudy advances in 2013. By Federal Reserve Bank of New York accounts, remarkable student debt obligation in the United States lies between $900 Billion and $1 Trillion with around $850 Billion in Federal understudy advance debt. About one-quarter of student borrowers owe more than $30,000; 10% of students owe more than $55,000; 4% owe more than $100,000; and under 1%, or 167,000 individuals, owe more than $200,000 to banks and various lending institutions. Of the 37 million borrowers who have exceptional understudy advance parities, 14%, or around 5.4 million borrowers, have no less than one past due understudy advance account. For every case of default, there are multiple students who have to declare bankruptcy or drop out of college and have to join the irregular or blue-collar work force, struggling to pay back whatever they borrowed .
In 2010, student debt obligation in the US surpassed charge card debt, and by 2011 student debt amounted to more than automobile loan debt in the US. This reveals the magnitude of the problem – not just in the individual level but also on the collective economic and fiscal level. By the final quarter of 2014 bankruptcy rates for students plunged to the point where roughly two in ten student loans is was defaulting and a potential bad loan. This creates long-term problems for students, since they are often unable to make bold career decisions in order to not risk a regular stream of income that is necessary for repaying student debt .
Description of the inequality dimension and the force energizing the problem
The problem of student debt which in itself is concerning enough – is further marked by a degree of inequality and social discrimination on the lines of class and race. Affluent students who can bear to attend a university without tackling debts can quickly start investing their earned money and putting something aside for retirement when they enter the workforce. Their less fortunate students, in any case, spend these years paying off their huge debts, in this manner extending the gap or inequality that existed from the beginning .
Most by far of Black students use loans to pay for school. Among the individuals who moved on from a government funded school, 81% had understudy credits, and 86% of tuition based school graduates had understudy advances. Latino students at non-public schools were well on the way to have obligation, with 87% graduating with credit parities. At government funded schools, 84% of students who get Pell Grants likewise graduate with understudy advances, contrasted with 46% of the individuals who don't get Pell Grants, and at non-public schools, 91% of Pell beneficiaries tackle obligation (60% of those without Pell Grants took out credits keeping in mind the end goal to move on from a tuition based school). The delinquency rates are frequently higher among low-income students since a large number of them go to profit-driven universities . A percentage of the most astounding delinquency rates have a place with students who have gone to revenue driven universities, which have a tendency to have poorer vocation results than customary schools, which might put more in giving great guideline and satisfactory teaching staff .
Suggestions on how the problem can be solved:
The main reason that student debt has climbed to such a height is the lack of normal financing options for students. Scholarships are few and far between, and many are not sufficient for all the costs of modern higher education. The costs of not just tuition and boarding have increased in recent years, but also the generally higher cost of living has definitely affected the trend. In short, many ordinary students from middle class and working class families can no longer afford to dedicate 3 to 6 years of their lives to full-time studies .
Tax-funded scholarships for means-tested students can be an important leveler in higher education and greatly reduced the riskier types of student debt. This has to be a political decision, but the argument is that by not pooling together national resources for education, individuals with high talent to contribute to the society and economy are being denied that chance solely because they lack the means to capitalize on their talent and hard work. Tax-funded and subsidized tuition fees, scholarships and easy loans for large numbers of students from working and middle class families, pursuing certain courses in the Sciences, Technology and medicine, can be extremely helpful while still being fiscally prudent.
References
Acharya, A., Blackwell, M., & Sen, M. (2015). The Political Legacy of American Slavery. Harvard University Journal , 34-39.
Autor, D., & Smith, C. (2010). Contribution of the Minimum Wage to U.S. Wage Inequality over Three Decades: A Reassessment. Chicago: Diane Press.
Bourke, P. (1989). Concentration and other determinants of Bank profitability. Journal of Banking and Finance Vol. 13 , 65-79.
Jeucken, M. (2010). Sustainable Finance and Banking: The Financial Sector and the Future of the Planet. London: Earthscan Publishers.
Piketty, T. (2014). Capital in the Twenty-First Century. Boston: Harvard University Press.
