The Problem of Student Debt and How to Fix It
TheProblem of Student Debt and How to Fix It
TheProblem of Student Debt and How to Fix It
Students’loans are a heated topic among Americans. It has attracted theinterest of the citizens and the politicians in equal measure.According to Jeje and Rodriguez (2016), over forty-three millionAmericans have student loans. Moreover, the total amount of the debtis over one trillion. Such figures have an impact on the lives of thestudents and the economy at large. The students have to live in debtfor a large part of their lives, which deters their futureachievements. Similarly, their spending capacity is restricted, whichbrings down the aggregate demand. There are several proposals toresolve the issue of the students’ debt burden around the UnitedStates. One of the suggestions in place includes that of theincome-driven repayment. The other one is to make college educationfree. The paper will evaluate the two approaches along with theirmerits and demerits by showing the impacts that they would have inattempts to resolve the issue of loan debts among many students inthe country.
Thereare millions of Americans who have already left college and are underobligation to clear their student loans. Income-driven repayment isone of the ways that can help ease the burden that they bear. Theprogram gives those who are paying the students’ loans the power todecide how much they can pay. The maximum that can be recovered froma salary is 15% (Jeje & Rodriguez, 2016). Moreover, the debt iswritten off after a period of between twenty and twenty-five years ofpayment.
Furthermore,the program also has an extension where public service forgivenessprogram offers better terms to those who are directly in debt to thefederal government. It is open to those who are in full-timeemployment. At the same time, they have to pay their income-drivenrepayment program without default. It only takes ten years to haveall their loans written off (Edwards, 2015). When properly worked,the program has the power to reduce the number of years that one hasto pay the loan. It also increases the disposable income of thoseunder student loans thus creating employment. However, there is thedownside of the program in that it only covers those who are employedin the public service and the not for profit organizations. Such anarrangement makes it discriminatory. At the same time, it does notaddress the root cause of the problem.
MakingCollege Education Free
Thetuition fees for colleges in the United States are prohibitive. As aresult, many deserving students who desire to get a college degreefail to do so. In recognition to that, the Tennessee governor notedthat there is only 33% of the population in the state with a collegedegree (Jeje & Rodriguez, 2016). While looking for ways ofincreasing the numbers, the state government enacted a law abolishingcollege fees.
Thoseopposed to the abolition of tuition fees argue that it is notpossible to finance the program. The argument is that if implemented,it would bankrupt both the federal and the state governments.However, that is far from the truth. The state of Tennessee hasdemonstrated that it is workable to have the tuition fee abolished.Currently, the government spends over $160 billion in loans, grantsand tax credits on students annually (Edwards, 2015). Additionally,there are the varying amounts that state governments spend oneducation. Despite such huge investments, statistics indicate thatthe rates of defaults are high. Both the state and federalgovernments abandon recovering these debts, and they sell themcheaply. Therefore, the benefactors in such arrangements are theprivate companies that buy the debts.
Thatbeing said, one of the main duties of a government is the provisionof public goods. In many ways, education falls into the category ofpublic goods. In consideration of the above, it is important that thegovernment chooses to have ways of raising money to pay for tuitionfees as a duty in the provision of education (Edwards, 2015). Themoney that the government loans and gives grants is quite enormous.Therefore, the introduction of efficiency in the disbursement andutilization can have a big impact. Through the department ofeducation, the government should find a way where the funds will getchanneled directly to public education institutions (Jones-Schenk,Leafman, Wallace, & Allen, 2017).Once middlemen are eliminated, making education free to all in publicinstitution will become a reality.
RealizingFree College Education
Oneof the ways of realizing free college education is through theenactment of policies to that effect. While on their campaign trail,politicians have promised to change the current situation (Butcher,2017). Although some of the proposals made are not realistic, theyare good starting points. The government has the option of willinglypassing laws which will help finance college education fully. Whenthat fails, the citizens will have the option of pushing to have thatdone.
Formerand current students are under the yoke of debt. The debts tracetheir source to education. In several developed nations, collegetuition fee is free (Butcher, 2017). However, it did not just happen.The citizens took part in demanding to have the tuition feeabolished. One example is Germany where the fee was introduced. As itkept rising, the people got concerned, and they united demanding itsabolition. Moreover, the timing when the elections were around thecorner worked in their favor (Butcher, 2017). The United States willhave no option when the government fails to abolish tuition feefreely. People will have to go out to the streets and demand whatrightfully belongs to them (Wiener, 2015). Nevertheless, the downsideof making it free is that it will increase the spending of both thefederal and state governments. Moreover, it would reduce thecommitment of the students since there is no price to pay.
Implicationsof Free College Education
Increasedaccess to college education is one of the immediate results of makingit free. Additionally, the disposable incomes of many householdswould also increase. In effect, that spurs economic growth andincreases the rates of employment. Although it will increasegovernment expenditure, the increase in jobs will also mean that thegovernment is getting more taxes. Therefore, the benefits willoutweigh the sacrifices.
Inconclusion, education has become a basic need in the society today.Despite that, there are many hurdles to its acquisition. Theprohibitive tuition fees close many out of accessing qualityeducation such that those who make it live with the repercussions ofpaying the debts they accumulate in college. The time is ripe to havechanges in the education sector. The transformations should aim thecolleges where the tuition fee will get abolished. When thegovernment pays the fee for the student, there will be a reduction inthe costs incurred during recovery. At the same time, it canrecuperate the money spent through taxation because employment willbe high.
Butcher,L. (2017). A real education: Dealing with debt. PhysicianLeadership Journal.
Edwards,S. H. (2015). But can America afford this approach to solving studentdebt? Time.Retrieved fromhttp://time.com/4119986/but-can-america-afford-this-approach-to-solving-student-debt/
Jeje,B. & Rodriguez, B. (2016). Why free higher ed. can`t wait:Students are rising up to demand free higher education. Dollars& Sense.Retrieved fromhttp://dollarsandsense.org/archives/2016/0316jeje-rodriguez.html
Jones-Schenk,J., Leafman, J., Wallace, L., & Allen, P. (2017). Addressing theCost, Value, And Student Debt in Nursing Education. NursingEconomics, 35(1),7. Retrieved fromhttp://www.nursingeconomics.net/necfiles/2017/JF17/7.pdf
Wiener,J. (2015). Aiming Higher: Make College Tuition Free. Nation.Retrieved fromhttps://www.thenation.com/article/its-time-end-tuition-public-universities-and-abolish-student-debt/
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