The Controversy of Government Subsidized Student Loans - Research Paper Example

The controversy behind the subsidized government loans for of Research depicts that there is a direct link between the growths in employment with level of education. The fact illustrates the growing need of most governments to eliminate the level of youth illiteracies within their borders. The view is the main cause of the funding of the tertiary educations especially to neediest students. The government of USA, for instance, gives the mandate of education funding to the department of education. The department of education in turn employees the students loans to achieve the same. The student’s loan is for the benefit of the government and the students. Besides, students must fill the application of the loans in order to determine the persons who are in need if the loan and to what amount should the loan be of benefit to them. The following article, therefore, outlines the loans that the students receive and the benefits of the loans towards the students and the state. The essay also covers the controversy that arises as a result of the loans. The controversy is because the role of the loans does not materialize since most of the students are not capable of servicing their debts. There is the need of the lenders to find other ways to make sure that the whole perspective of supporting the higher learning education is successful. The reference list is a provision at the completion of the document. The instance is in a manner to authenticate the propositions therein. Student’s loans Student’s loans refer to aids that are in forms of funds that are given to students to be of assistance in paying their taxes, to buy books and to help in their living. The loans are very different from other loans since they have very low interest rates. The loans exist because most students do not have the capability of taking care of the tuition fees once they enroll in a higher learning institution. However, t5he students are repayable once a student completes his or her studies. If a student does not repay, there is mostly a cost to penalize the act in an instance of discouraging the same from happening. The main argument that arises is that not all students are capable of repaying the loans since not all the students tend to acquire job opportunities. Therefore, some of the penalties that the lender of the student loans imposes may not be enough reason to do against defaulters (Houck, 2008). From another perspective, the loans that the government lends to students tend to be a huge portion of the national budget. Besides, the education system is a continuous process that becomes a yearly expense. Therefore, there is a requirement to discover a solution that tends to resolve the issue of the loans and be fair to the economy. In particular, over twenty million students enroll in higher learning institutions in the USA every year. Correspondingly, sixty percent of the total number of students who register in universities and colleges are in need of students loans in order to facilitate their studies. The USA operates at a different case when it comes to college education. The students who attend college do not receive direct funding from the government. The cost of education is thus the responsibility of the students’ parents. However, the local government subsidizes the fees directly to the colleges. The example is made possible through the taxation practice. The funding is only a provision to the public colleges only (Lough, 2010). Thesis There is an argument that the schools that offer training at a higher level should at least receive more funding in the form of loans since the organizations tend to incorporate more services that accompany education. The fact does not eliminate the fact that there is a need to fund every needy student that is in the school system. The primary goal of writing the publication is to inspect the conflict of interest that the government experiences in supporting the education system. Reasons for supporting the students The main reasons why students get loans while attending higher learning institutions is dependent on three factors; the students need the loans, and the students can n get the loans, and the students can easily acquire the loans. The instance however from a broader perspective is dependent on other factors that are of more importance to the program. Socioeconomic reasons The government is in a bid to increase the growth rate of the economy through the provision of the higher education funds. The funds ensure that the youth population has enough skills that may be useful in the economy at large (Nyahende, 2013). The funds also ensure the elimination of the illiteracy levels that are a major disadvantage to the economy. The institutions of higher learning tend to increase the charges that the students incur for learning. In fact, the change is so rapid that the capability of the students to afford the fees on their own deteriorates with time. In an attempt not to get off the schooling program, the lo9aqns are beneficial and act as the guarantee of the completion of the studies. Most of the students in the higher education institutions tend to emanate from humble backgrounds. The instance proves that most of the families cannot afford to pay the charges that accrue for the studies of their children. The only option is to access a loan or to drop out in the case of the absence of the loans (Somers, Hollis & Stokes, 2000). The provision of funds to the needy students also acts as a measure of poverty reduction in the economy. (Sörlin, 2007) The aspect is through the reduction of the dependence levels that mar result by the students joining the learning institutions of higher education. The instance is factual through the reduction of the probability of the deterioration of the standards of living of the parents that can compel them to the vicious circle of poverty. Payment methods for debts by the students The students who attend higher education mostly access loans that facilitate their learning. However, the loans are repayable although the interest is very low. However, the amount that accumulates for all the years tends to be substantial. Most of the students, therefore, prefer to start paying the loans while they are still learning that accumulate the whole amount. The aspect, therefore, is possible through working as part time human resource agents. The jobs [provide funds that the students use to repay the loans. In other cases, some students are lucky since they can study under scholarship. The instance of learning thus rules out the need for loans. The reason is that the scholarship takes care of all the charges that the students incur (Bush, 2009). The other means of repayment are after the prior of learning is over. The students hope to get employment in order to service the loans that they did use while learning. The scenario is most common and is the most practical. The avenue is however dependent on whether they will attain employment. If they do not, they are incapable of servicing the debts. Federal program that related to student loans A national program relates to a government policy that reflects the actions of the state in solving a particular need that affects its population. The US federal government has different programs that pose as possible solutions to the students that are incapable of paying for their education. Some of the programs are the Pelly grant and the Sallie Mae. Pelly grant The grants are funds that the federal government issues to students in order to cater for their education. However, Pelly grants are for the students who are need and are completely incapable of paring their educational expenses. The loan is also for undergraduate students only who do not possess other academic qualifications from any institution that offers higher education. The loan is also for those students who are not part of any baccalaureate programs in the school systems (Davidson, Preez, Gibb & Nel, 2009). The grant is the first basis for a student’s financial assistance from the government. The department of education in the USA is the one that is responsible for the Pelly grant. The main evaluation frame that is prevalent is standard formulae that tend to evaluate the financial position of the applicants. The amount of a federal Pelly grant is dependent on calculations that are in accordance to an award year. The award year depicts the period as from 1 July to the June 30th the next year. The determination of the loan is dependent on the EFC that represents the contribution that the family is capable of supporting their children. The information of the family contribution is from the application form that the student fills in order to be eligible for the aid. The calculation consequently gives the maximum amount that the student can receive. Sallie Mae The phrase is a representation of the SLM Corporation. The institution is a public company in the United States that tends to issue loans to the needy students who qualify for higher education. The organization is also responsible for the collection of the loans and the servicing of the students loans. The agency manages debts worth of about one hundred and eighty billion dollars. The bonds are distributed to over ten million needy students (Educational Funding—who pays?’ 2012). the loans are mostly for the students who attend the private institutions for higher education. There also about six thousand and six hundred employees who work for the corporation’s, activities and ensuring the smooth running of the corporation? The Sallie Mae is thus the official sponsor of the Sallie Mae fund. The fund focuses on the individuals who have low incomes and the persons who tend to be the first in their unit families to gain admission in higher learning institutions. The fund tends to provide scholarship for the students. The funds primary focus is to support the minority. Comparison between Pell Grant & Sallies Mae Both the programs tend to focus on the promotion of the education of the persons who attain access to tertiary institutions. The programs also provide free funds that tend to benefit the students. The amount that the applicants gain is dependent on prior information that the students give while applying for the loans. Both the programs are part of the federal policies for the preservation of the school system (Elliott, 2014). The two programs also have some differences between them. The Sallie Mae focus is mostly for the students who enroll in the private schools while the Pelly grant is mostly for the persons who attain admission in public institutions. The Sallie Mae also does not necessarily provide direct funding. The program may provide initiatives and other programs that may consequently provide enough funds for the funds that benefit the applicants. On the other hand, the Pelly grant6 are more of direct funds that the candidates receive. The application of the Sallie Mae funds is mostly through the institution that is offering the educational services. The issuance of the funds is also through the institutions. The left over funds after the payment of the fees is what caters for the other needs of the students who pose as the recipient. The Pelly fund is more flexible in that a percentage tends to pay for the costs while the student receives some for his or her upkeep FRØLICH & STRØM, 2008). Advantages of student loans The benefits from the government [policies towards education are not for the students only but also for the government and the society in general. Advantages to the government The government tends to earn benefits by lending the loans. The instance is also more appropriate during instances of bankruptcy. Although the interest is minimal, the capital that focuses on the funding is considerable and therefore the benefits are substantial. The government also ensures that there are persons who have skills for the job market. The skills are an advantage to the economy. With respect to the view, the economy benefit from the funds since it is an investment towards the human resource (Xiong, Teng, Wu, Wang & He, 2014). Adjustments to the interest rates of the student’s loan The regulation of the lo0ans should be in a way that benefits the government but still does not worsen the condition of the students. Therefore, the setting of the interest rates should in a way that approves Pareto efficiency in the education center. Therefore, the setting should be along some specials guidelines. The policy should recognize the difficulty that lies in the refinancing of the loans. The interest rates should also recognize the existence of the colleges that operate for profit as well as the schools that do not entail the prospects of employment of their students. The link that characterizes the debts that are rising due to the increasing administrative costs in the tertiary institutions should be a primary consideration while setting the interest rates. Advantages to the students The student in person acquires knowledge that helps in the elimination of personal illiteracy. The students are thus at a higher chance of excelling ion life since most of the opportunities in life belong to the persons who have educational qualifications. The students tend to can improve their lives through the facilitation of their education. The fact could not be possible in the absence of the student’s loans for most of the students. The students also attain skills that tend to be an added advantage when competing for the job openings in the employment market. Reasons why loans improve students’ lives with a case study in china The education system in china comprises of six years in the elementary school. In addition, a three-year-old lifetime in the junior school and three years in the senior training schools is part of the system. Moreover, there is a three-year term in the university level. The main advantage of the funding in china is the elimination of the illiteracy levels in the citizens of china. The china funding of educational is also possible as a measure of promoting the economy that has been an essential perspective in china. The economy of china has been advancing. The fact means that the students tend to receive skills that help them after the school term. In particular, the illiteracy among the youth is below five percent from the year 1999. That was the year that the government of china did invest heavily on the funding of the tertiary institutions. The nation of china has thus been in the focus of personal independence that is possible through the financial of schools that offer specific skills that do not require employment for an individual to utilize them. The fact has made the level of innovation in china rise significantly. The level of dependence is also on the decrease, and the economy is benefiting heavily from the funds of education. Discussion Although the investment by the government towards the educational sector is beneficial both to the students and the government, there are conflicting interests that tend to be disadvantages to both the parties that the play part. The reasons for the regulation of the interest rates by the government might not be genuine. The government may raise the profit level in the instance of earning more profi9t. In such a case, the government stands out to be the only benefactor while the students are the losers. The aspect of who tends to be the principal benefactor of the educational funding is not clear. The determination of the extent that the students benefit from the loans is cumbersome. The instance is because the benefits are dependent on the level of employment that is prevalent in the nation. If the rate of unemployment tends to be high, then the students do not experience any advantages. In fact, the students are not capable of servicing their debts. The perspective, therefore, alters the whole meaning of student’s loans. The student’s loans, therefore, do not achieve their primary goal. The definition of the student’s loans is that they are funds with low interests that the government issues to needy students with the aim of facilitating them higher education. However, the student’s loan is a reflection of the future burdens that the students have to bear since the unemployment rate eliminates the need for the tertiary institutions. The students are thus better off without the loans if the unemployment rate in a particular area is little. The employment factor, therefore, determines the need for the funding of the level of education in a particular area. However, the funding of education reduces the variations that are prevalent between the wealthy and the poor. The reason is that the poor may not provide the education while the rich may afford the same education or even better educational service. The alternatives There should be a platform that involves the consideration of other options that can offer better terms of the education. Some of the alternatives include the banking institutions, the unions that provide credit and the state agency. The perspective is in an instance to reduce the monopoly that the government experts to the students through the control of the loans of the students. The students should also receive information on the best deals that they should get into while applying for a loan. The payment methods and the rate interests should be components of the advice. Conclusion The financial problems that the students experience cannot be the only barrier towards the entrance to the tertiary institutions of learning. The aspect implies that issuing of funds is not the most convenient way for making sure that tertiary education is a success. Although the loans help in facilitating the education, they are dependent on other factors that tend to determine if they help the students or not. An example of such a factor is the level of unemployment in the area. The providers of the funds should, therefore, not find contentment in the provision of resources to the students. There is a requirement to innovate a more comprehensive means of financing the tertiary education. The prospective that arise from the interest that the government and other lenders earn should be realistic and take into account the needs of the students. References Bush, T. (2009). Editorial: Funding Education to Address Disadvantage. Educational Management Administration & Leadership, 37(2), 155-157. Davidson, J., Preez, L., Gibb, M., & Nel, E. (2009). Its in the Bag! Using Simulation as a Participatory Learning Method to Understand Poverty. Journal Of Geography In Higher Education, 33(2), 149-168. Educational Funding—Who Pays?. (2012). Journal Of Neuroscience Nursing, 44(4), 175-176. Elliott, W. (2014). Student Loans: Are We Getting Our Moneys Worth?. Change: The Magazine Of Higher Learning, 46(4), 26-33. FRØLICH, N., & STRØM, B. (2008). 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