Student Loans: How Do We Curb the “Debt Crisis”?

 

Article by Daniel Perretta | 704 words

Today, it is not just people who have attended college that know all about student loans. With the amount of media coverage allotted to the ongoing debates and reforms involving student loans, anyone who has access to news media could be as informed about student loans as the students themselves. Some believe these loans have become a necessary evil. If young people want to attend college, the loans are just about the only way to do so. The problem that has arisen recently—and is often referred to as the “student loan crisis,” “student debt crisis,” or any other combination of “student” and “crisis”—is that people are graduating and claiming they cannot afford their student loan payments.

Student Loan Debt

Credit: Salon.com

 

Opinions on why people are having issues vary greatly, but there are some facts out there that should be noted and explored. The first of which might be a good example of how people get into this problem to begin with. According to Dan Latterulo, a financial advisor, tuition costs are partially to blame for students’ woes. He stated in an interview with Nvate, “Higher education costs are climbing exponentially and are outpacing inflation at disturbing rates.” This essentially means that college has become more expensive without the rest of the country catching up to the costs. Borough of Manhattan Community College’s Dr. Antonio Pérez says that even though cost of living has increased by three times between 1978 and 2008, “college tuition and fees have increased tenfold.” It is no wonder some people are concerned.

On the other hand, Jeffery Dorfman, a contributor to Forbes, believes that the crisis is not actually a crisis at all. According to Dorfman, only four percent of the population is in a crisis over student loan debt. He also claims that the “crisis” is a product of liberals pushing an “income redistribution” agenda. Although Dorfman comes off as a bit like a man standing on a soapbox, he does make a few good points. Not everyone who has student loans is in jeopardy, and most student loans can be paid off rather quickly so long as you are willing to watch your spending and give up some of your fun money.

Some people, however, believe that the problems surrounding student loans demand serious attention. So, there has been a lot of talk about making a public college education free. The idea is that if you can make it into the university or college, then you should receive a free education just like in public grade schools. Some European nations have actually adopted this model. But a question still remains: Who is going to pay for it? Let’s be honest: even a free education is not free. There is some entity out there that needs to fork over the cash for these students to attend college, and Les Lepold of the Huffington Post believes Wall Street should pay the price. He claims that Wall Street could easily pay for higher education through sales taxes on transfers, bonds and derivatives that they are not already paying. Such a bold plan, of course, isn’t going to be put into action any time soon.

Some recent developments have been working to the advantage of borrowers, though. The Health Care and Education Reconciliation Act helps graduates by giving them the ability to limit their payments to ten percent of their income. It also provides loan forgiveness after twenty years of payment, or ten years for members of public services, such as teachers, nurses or military recruits.

There is also a charitable organization called the Rolling Jubilee that has surfaced recently. It has gone so far as to purchase loans from Corinthian College, a for-profit school, and then completely forgive those loans. This same group also tried to get a large number of graduates to default on their student loans in an attempt to make a statement to the government.

With so many opinions and ideas in the stream right now, it is hard to tell which ones will surface as the best solutions to student loan problems. However, the surge of new ideas for handling the situation should be promising to people who are struggling to make ends meet thanks to overwhelming student debt.

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