Student Debt and Its Implications - Essay Example

Student Debt and Its Implications Within the past decade, costs associated with college education surpassed inflation by six percentage points yearly. This brought private school education price to thirty seven dollars annually. This just one among reasons why students increased their borrowing. In addition, federal student loans were raised by the congress, which also introduced a grand plus loan. Through this, graduate students could borrow even attendance cost. Lenders also contributed much as they made it so easy for students to get loans. This was up to the year 2008 when credit started to tighten up. Many students engaged into borrowing as well as in huge sums of money. During graduation, average debt in 2008 rose by six percent in the following year heating $24,000. In the year 2008, there was the highest number of defaulters in federal loan repayment in over a decade. This was when the nation’s economy slid into recession. Partly driven by the slow economy, federal loan defaulters are increasing. If a student fails to make payments for 270 days, it becomes a matter of increasing significance to both community colleges as well as the students. Loan default brings about severe consequences to the borrowers as well as colleges. When one misses some payments he/she could be demanded to pay through calls and letters. However, defaulting can destroy a student’s future. Federal agents will demand that a defaulter pays the loan in full. In addition, the case may be assigned to some collection agency. A defaulter’s wages as well as benefits could be garnished till the balance (that may not be easy to discharge in bankruptcy) gets resolved. This may apply even to old age social security benefits being garnished (Clark, 499). Loan defaults for borrowers could wreck their credit, create inability to buy a home or car, finding employment or even renting a home. Colleges where only few students get to borrow have special protections, however, colleges could result to being not eligible to federal loans as well as grants where most of the colleges’ former borrowers default within a given period of 3 years’ time for entering payment (Bryce, Matthew and Debbie, 1). With federal loans as well as the grand plus loans, it is at a time when this loan is twenty one to thirty days late that the loan can go to delinquency but the national credit bureaus may be informed when loan is 60 days late. However, the program of federal loans provide a number of plans to that held defaulters. But one has to negotiate with their lender incase for private loans which involve agreement terms of the loan as well as options of payment. Today, student debts impact almost the whole life of a person in almost every aspect. Student loans may determine what one is to become in life. Some lenders have become very wealthy in life while some borrowers have become extremely affected negatively by the same. A good example of such people include Albert Lord (lender), who is the chairperson as well as past CEO for “ Student Loan Leviathan Sallie Mae”, and Alan Collinge, (Borrower), a thirty five year old who is a former engineer of within Washington State. Lord has become very rich as well as a public figure. On the other hand, Collinge has had problems after he borrowed student loans from Lord’s company to clearly his three degrees course (504). He made payments of $7,000 without delay or default in year 2001. He then left for a job that later he lost, and got under pay for 2 years resulting to defaulting his student loans. He later was presented with an $85,000 bill regarding the loans. It was at this point that he realized how much Lord was making out of student loans. Right now Collinge is indebted up to $105,000 of student loans. Collinge now believes that Albert Lord is successful as a result of trampling borrowers like him. Over a ten year period, Lord’s company has transformed from an enterprise sponsored by the government to some vertically integrated private company that dominates every aspect of the business of student loans (Kamenetz, 505). This is a good example showing how lending of student loans is paying and on the other hand, how the loans may affect a borrowers life negatively. According to (Jesse, 2013) the government made $41.3 billion profits in student loans in year 2013. This was estimated to be slightly below profit than that made by world companies Apple and Exxon Mobil in 2012 (Jesse). The way people present themselves when they need something could be very different from what they are. Most organizations as well as individuals look for ways personal elements with which to vet people willing to join organizations or become members of institutions or families. Personal debts including student debts have become of great significance in this area. They can be used to evaluate how responsible a person is. A father may check how a man wishing to marry his daughter has conducted himself in repaying his debts. This gives the father an idea of how responsible this person is. Employers as well vet employment seekers by means of their credit history ((Kamenetz, 502). It is through this concept that America has come to have much student debt that are education related compared to credit card debt. High student debt is not a good thing basing on fast rising tuition of the nation’s higher learning institutions. Average tuition costs have increased significantly since 1985 and within the past decade they doubled. It has outpaced inflation rate as well as energy, medical as well as housing costs. Most students find that the only choice they have is to borrow for their education. Afterward, they have no choice as well that borrowing to pay for their education debts. It is a good thing that student loans are becoming cheaper due to incremental improvements within the economy, private lenders increasing completion, as well as federal reforms (Kamenetz, 508). Student loans are good in the sense that they facilitate learning for students. However, if a person does not make good arrangements to pay back the loans then they might be harmful. Lenders are making a fortune out student debts. On the other hand, borrowers may end up very much affected negatively by borrowing for education. The manner in which people pay for their education may come to reflect in later life when one is searching a job as well as other opportunities. It is a good thing that student borrowing is becoming cheaper. References Bryce, McKibben, La Rocque Matthew and Cochrane Debbie. "Community College Strategies to Protect Default." Protecting College and Students (2014): 54. http://www.ticas.org/files/pub/Protecting_Colleges_and_Students.pdf. Clark, Jane Bennet. "The Dark Side of Student Debt." Robert, Lamm and Everett Justin. Dynamic Argument. Philadelphia: Cengage Learning, 2013. 816. Jesse, David. "Government books $41.3 billion in student loan profits." USA Today (2013): 1. http://www.usatoday.com/story/news/nation/2013/11/25/federal-student-loan-profit/3696009/. Kamenetz, Anya. "Your Late Fees, Their Millions." Robert, Lamm and Everett Justin. Dynamic Argument, Brief. Philadelphia: Cengage Learning, 2013. 816. Read More