Advocacy Position Paper on Student Debt - Coursework Example

Advocacy Position Paper on Debt Introduction: All of the in an are not capable of paying all the funds of that institution. So this is the policy of that organization to provide facilities to its students which ease their studies. Student fund is the answer to this problem which is a kind of debt the student owes to an organization after he or she has graduated. The lending can be in the form of student loan which can be returned to the institution after the student complete his studies and begins to earn on his own. This issue is becoming serious in every institution because of the reason that students want to get quality education and want to study in a renowned institution for that matter. And when they are successful in getting admission in such an organization, they apply for student loan so that they can help their parents in getting low pressure due to their fees. The educational institutions are formalizing their policies in such a way that they should help the students in getting the best educational training and also obtaining the dues within the set time frame. The statement of position exists in the form that students should be provided this facility in a lenient way but in compliance with the institution’s policies. Body: The student debt started when in US high need of funding the youngsters for their education was felt. The government believed that education is the primary responsibility of parents for their children and if they are not able to provide them money to get education in a renowned institution then the government must allow the institutions to help such students. In US, one of the first acts was passed after Second World War which was named as National Defense Education Act. Not only this, but many acts were passed by the government to ensure that the government and educational institution are working towards the goal. People were positioned on the posts so that they can manage and look after all the areas regarding student funds in organizations. Student financial assistance was administered to promote this and positive response was seen in this regard. The US governments also took into account the measures to be taken when income level rises. In 1992, the Higher Education Act focused on unsubsidized loans which allowed students from any income level to get a federally-guaranteed government student loan. In 1993, the Budget Reconciliation Act included the William D. Ford Federal Direct Student Loans program. This program allowed students to borrow directly from participating schools who, in turn, got funds directly from the U.S. Department of Education. From the years’ performance we see that student loans are playing their part in considerable way. Everybody is having equal opportunity to get high and quality education. The kind of studies that was needed by a high professional to get a good job and work well some four to five years ago, now that number has increased. Those people who did not get the opportunity to study so well are now seen working as taxi drivers or serving as waiters in some restaurants. Student loans’ goal was to provide students an equal chance to get high education to become some prominent figure in society and prove best in their lives, based on not only what they wanted but also on what they could afford. When fully educated people enter the working field with the help of their financial aid, they have to work hard to overcome that debt and that contributes a lot to the welfare of the society and country. That, indeed, creates economic competition in the world which is quite healthy. There are basically three kinds of student debts in US: The loans which are made to students directly (federal student loans) The loans which are made to parents directly (federal student loans) The loans which are made to students and parents both (federal student loans) All of these loans are made to the students so that they can take help in any way they want and the affordability which they can go through easily afterwards. The government and educational institutions have to work in alignment so that they both can help students in every fair way. Several researches have been conducted to support the fact that student loans have increased since the beginning. A timeline has been displayed here for elucidation1: 1998: Only about half of the students borrow. The other half are assumingly rich enough to pay. 2001: University of Wisconsin reports decrease in student debt. The average loan debt was $15,140 for students who earned their bachelors degrees in 2000-01, down $810 from 1999-2000. Also, average loan debt has dropped $771 from 1997-98 to 1999-2001. The percentage of graduating students with debt also decreased, dropping from around 46 percent since 1997-98 to 43.2 percent this past school year.2 2002: Government says that debt has increased again because new students are entering the institutions again. 2003: Student debt increased in Canada as not only the Canadian students were interested in getting high education but also the foreigners came here to study. 2004-06: The trend goes on but three reasons were stated for the student debt to rise: interest rates have begun to rise, tuition is skyrocketing, and student aid programs are stuck in 2003. 2007-09: Student aid increased in huge amounts as the students are becoming more competitive in studies and they need various degrees for their professions. College scholarships are famous amongst all. Student loan consolidation is one method for students to ease their loan intricacies. It is a kind of debt that students can take from standard lending institutions. It means that a student can take out loan from one institution to pay loans to the other at lower costs. Making different payments on various debts is simplified by this consolidation. The benefits for students of these consolidated loans are lower interest rates, increase in time for loan repayment and reducing the number of lending institutions. Students who have taken debt from the creditors will one advantage that they would have some debt relief and they won’t be getting many calls for paying back the debt. Consolidation of loan also provides peace of mind as other liabilities are somewhat lessened. Also, the fixed interest rate would allow the borrower to know when and what amount of loan is repaid at every month. One or more loans can be consolidated; they don’t have to be combined for that matter. Loan consolidation is not without shortcomings; fair interest rates are difficult to find, especially in an inflation driven economy. Secondly, the consolidation debt can have a longer term to payback in the end still after paying the debt. This means that if the time period of debt is prolonged for a student’s ease, then the interest to be paid would also spread over hat full term. A false sense of security develops in the mind of student who borrows loan because of the fact that loan consolidation reduces monthly payments. Conclusion: There are many ways a student can get debts from the educational organization he is studying in. some of the ways are described as follows: Sometimes it is difficult for the graduate student to get a good job after completing studies and then getting a good salary during inflation days. Forbearance is one method to allow students to delay loan for up to one year after the loan payment is due. But the interest rate goes on to accumulate. Students can go forbearance if they have defaulted on loans in the past. A student qualifies for this technique if the student loan payment exceeds 20 percent of his monthly income. A student can also ask for the deferment of loan repayment for a specific period of time. Any kind of hardship they face can qualify them for this deferment. One of the most convenient methods is cancellation. This is for those who cannot work due to suffering in an accident, are needy or are deprived. Reimbursement is granted by the government to such students and the advantage for such an action is that further payments to be paid on that loan are not required thereafter. There are considerations made by the students about how much to get from the organization so that they can pay back easily according to the interest rates and in an appropriate time period. There is no hard and fast rule for such an action and no limit for that purpose. Lenders keep no restriction on that issue and lend students or parents without keeping any difference between them or colleges. Parents and students are taking out private loans in greater quantities nowadays. This can be verified by the fact that ten years ago, they made up 5% of education loan dollars; now its 20%.3 The lenders who lend money to students know that they would get money back in suitable time period leaving behind all the odd chances of such an event. Defaulters can be tracked down by the system handling owned by the educational organizations. They can see in the past who has not paid the debt and how that matter is to be handled fairly. Avoiding the use of credit cards and working part time are some of the ways a student can avoid student debt. If these steps are taken in order to avoid chances of falling into debt trap then one can enjoy tension free life of student debt, not only for his own sake but also for his parents. Bibliography Federal and Private student debt consolidations. (n.d.). Retrieved March 10th, 2010, from Earth Times: http://www.earthtimes.org/articles/show/federal-and-private-student-debt-consolidation-loans-for-colleage-student,1185708.shtml Help us investigate; abuses in the student debt industry. (n.d.). Retrieved March 10th, 2010, from huffpostfund: http://huffpostfund.org/blog/2010/02/16/help-us-investigate-abuses-student-debt-industry How to avoid student debt, while in college. (n.d.). Retrieved March 10th, 2010, from ehow.com: http://www.ehow.com/how_5190237_avoid-student-debt-college.html How to pay off student debt? (n.d.). Retrieved March 10th, 2010, from Personal Debt Management: http://personal-debt-management.suite101.com/article.cfm/how-to-pay-off-student-debt Student lending analysis. (n.d.). Retrieved March 10th, 2010, from Student lending analysis blog: http://studentlendinganalytics.typepad.com/student_lending_analytics/2010/02/dept-of-education-may-replace-existing-student-debt-management-and-collection-system.html Student Loan Debt. (n.d.). Retrieved March 10th, 2010, from Student Debt Relief: http://www.studentdebtsrelief.com/ Student loan organizations. (n.d.). Retrieved March 10th, 2010, from All about student loans: http://www.allaboutstudentloan.com/student-loan-organizations-debt-consolidating.html Student loans. (n.d.). Retrieved March 10th, 2010, from Fin aid.org: http://www.finaid.org/loans/ Read More