In our recent Student Voices Scholarship program, we posed the concept of student loans and whether their burden has become an institutional crisis. One entrant, Steven Rios, noted that there is a cycle, and while the costs of tuition are annually rising, so is the value of higher education. However, employers will continue to constantly value the education, and therefore there is no end in sight for prices to drop, as the value will continue to be met with high demand from the market. Rios notes that scholarships continue to be an underutilized avenue for funding, and that universities need to work more directly with students to help understand their financing options.
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Every year the value of higher education increases. And so does its price. With more employers desiring employees who have more advanced degrees, it forces more students to continue their education. But as they continue, they accumulate an unprecedented amount of student debt. With the cost rising every year, many find themselves with debt that will last them most of their careers. The system is not pretty, but it is not that flawed either. With only a few adjustments, that towering pile of debt could be brought down to a much more manageable level.
Rising college tuition is the first problem that needs to be solved. As it currently stands, students are forced to pay an ever increasing sum if they want to stay competitive in today’s job market. With almost everyone in the labor force clamoring to get a degree, many colleges see this as a perfect opportunity. With a rise in demand comes a rise in prices. But unlike with an economy, the price level for tuition has no reason to drop back down. Employers will continue to prefer those with higher degrees of education, and potential employees will continue to improve their chances of getting hired. By stopping this upward spiral of prices, future students will be able to actively plan for the debt that they might have to take on instead of having it dumped on them during their enrollment.
Scholarships have been, and will continue to be, one of the most underutilized avenues of reducing student debt before it even happens. With millions of dollars in scholarships going unused every year, it is no wonder that debt continues to rise. Many students do not even realize that they might qualify for a multitude of scholarships. A simple solution would be to make these scholarships either more readily available or more easily accessible. By broadening the range of these scholarships, students will be able to take advantage of these opportunities before they decide to take out loans.
Another method starts with the educational institutions themselves. They would have to sit down with the student and set out, or at least help set out, a plan for them. There are certain opportunities colleges offer that allow students to study but also make some money. By helping the students find these opportunities and by providing them, these institutions could get the money that they charge for teaching and also keep more students till graduation.
But allowing students to declare bankruptcy to erase their student debt is not a benefit to anyone. For the student, it has repercussions that can last for at least the next decade. By declaring bankruptcy, they admit to any and all creditors that they cannot be trusted with a loan. By severely dropping their credit score, it would make it nearly impossible for them to successfully apply for any loan except those with an outrageously high interest rate, and even then they would be unlikely to get approved. And the student debt does not just disappear either. The cost is passed off onto others, namely taxpayers. For the taxpayer, the taxes that they pay were utilized by the government to give students these loans, but now, instead of the loans being paid off, the debt vanishes. This leaves both the government and the taxpayers with less money than they started out with.
A problem as complex and difficult as student debt can be rectified by understanding the problem and the people involved. By seeing the colleges as businesses, the reason for increasing student debt becomes clear. By looking at the students, how student debt has evolved into such a problem becomes understandable. By enlightening the students and putting a cap on colleges, student debt would no longer be the ball and chain of many after graduation.