A student debt crisis has gripped the American society. Most students graduate with high amounts of debts which they are never able to pay until late into their adult life. The joy of graduation is often immediately destroyed by the realization that it will take decades for the student to pay all their student debt, notwithstanding other social and economic obligations such as mortgage, and car payments. In this paper, I will explore and examine student debt effect on society. I also analyze how society and the never ending belief in the capability of higher education to lift individuals out of poverty has created a circle whereby every individual in society amass high amounts of debt so that they can be equipped with a higher education qualification.
It is estimated that students in the United States spent twice as much in higher education as compared to other developed nations. About $491 billion was spent in 2012 on college tuition and fees (Eaton et al. n.d.). It is also argued that student revenue increased by more than twenty three percent in 1987, in 2002 it increased by thirty percent and it reached forty seven percent in 2012 as hare of revenue in public colleges and universities (Eaton et al. nd). This increase in cost has also seen in the increase of the number of for-profit private colleges and the willingness of lenders to loan money to students from all economic backgrounds. With the cutting of state funding of higher education funding a new crop of lenders has emerged in the form of loan markets (Jacob, McCall and Stange 2013). Eaton and colleagues argue that a reduction in state funding forced private and public colleges to look to municipal bond markets for funding of capital projects. This also has seen the rise of for-profit colleges that have heavy investor backing and have adopted an aggressive marketing mechanism to lure students into their colleges and provide those students with loans that are now burdening society as a whole.
One of the effects of student debt is its adverse effect on family income. For profit organizations have created a climate where borrowing is easy but not cheap. The estimated amount families are paying on student debt has increased from $15 billion in 2002 to more than $34 billion in 2012 in student loan interest (Eaton et al. nd). Research has shown that college costs have greatly increased in the United States outpacing inflation (College Board 2010b n.p.). The onus and burden of paying the high college cost lie on the students and their parents (Choy and Berker 2003; Houle 2013). Even though tuition fee and other college related costs have been increasing at an astronomical rate, grants to college have not increased. Instead grants have been cut in fields like humanities and social sciences. The little grant money covers a fraction of costs leaving students and parents to cover the larger difference. One of the problems in student debt is that although there is significant rise in college costs, income for low and middle class families has barely increased creating a huge economic and social vacuum that families need to fill with their savings.
When costs of college rise, students are forced to pay more in loans and purchase less affective both family health and the economy. Since the economy does well when individuals spend, it is adversely affected when individuals spend less and use most of their earnings to pay back loans with high interest rates (Freedman 2014). Research has shown the high debts often negatively affect the economy especially when it limits the amount that individuals can spent.
Dwyer, McCloud and Hodson argue that student debt is a double edged sword (2012, 1136). Debt helps the society cover the difference between a student’s family resources and the cost of college attendance. It also is a way for a student upward mobility especially in students from low income families (Houle 2013). It however has other effects like limiting a student’s college choices and creating a cycle of debt accumulation that end up affecting generations of families. When a student accumulates large amounts of college debt and fails to get the desired job in a tough job market. Their family and even planning for the future is hampered. Atkinson argues that there are programs like debt forgiveness geared towards helping those students with debts that are impossible to erase but these programs can also be harmful if they come with penalties.
In conclusion, student debt is among one of the United States’ economic and social problems. The livelihood of college graduates is greatly affected by huge amounts of debts. The situation is dire for students who drop out before finishing their degree because they never get to reap the benefits of their education. All they have at the end is debt which cannot be sustained by their low income wages associated with not having a college degree. Society also has played a major role in the accumulation of college debt. The belief that college education is the only way to prosperity has led students who could have gone to technical colleges to invest in an education whereby at the end all they do is pay up debt rather than help their families.
References
Jacob, B., McCall, B. & Stange, K. (2013). College as country club: Do colleges cater to
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Dwyer, R., McCloud, L. & Hodson, R. (2011). ‘‘Youth debt, mastery, and self-esteem: Class-
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Dwyer, R., McCloud, L. & Hodson, R. (2012). ‘‘Debt and graduation from American
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Eaton, C., Dioun, C., Santibanez, D., Goldstein, A., Habink, J., & Thomas, R. O. (n.d.)
Borrowing against the future: The hidden costs of financing U.S. higher education. Debt and Society. Retrieved from http://debtandsociety.org/publication/borrowing_against_the_future/
Freedman, Josh. (2014). Student loans are a drag on the economy and society. Forbes. Retrieved
