Benefits of Student Debt - Case Study Example

Benefits Debt The use loans has increased with two-thirds of American undergraduates requiring student loans to access education and gain access to better employment opportunities. However, there have been challenges associated with student loans including the high rate of default among the baby boomers that have made the emergence of debate on student loans in terms of its benefits and the cons it offers to the users. Baby boomers default rate of 16% amounting to $18 million was reported by the Government Accountability Office in 2013. Student loans debate has continued for a long time with proponents of its benefits taking their stand and those advocating for its abolition and limitation owing to its cons. The need to have an understanding and provide a stand on the issue has never been greater forming the basis for the study. The paper aims at the provision of an argumentative essay on student loans through looking at the benefits and disadvantages of student loans with a solution provided in the end. The arguments for student loans include the provision of a channel to get a degree for the students through a student loan, which may not have been possible owing to the high financial requirements. Achieving higher education for a high percentage of American students is made possible by student loans preparing them for jobs that allow them to make repayments and access better opportunities in life (Beckie, 1). Student loans allow students to have mode dedication in their studies and provide them with a basis to make good use of resources at their disposal at the university. Having knowledge of having to repay their student debt, students will seek to make the best of their studies through choosing the best majors and studying more to be the best and access better jobs that will allow them to repay their loans easily (Beckie, 2). Students studying on a loan will have pressure to have a better understanding of the payment of loans, interest rates, the need to manage debt, and be prepared to deal with their financial issues early in life preparing them for life after school. Students will therefore be better prepared to deal with financial challenges in future when they have student loans to think about and cater for in their budgeting both in and after school making them better-moulded individuals (Carmona and Thompson, 1). According to Carmona and Thompson (1), repayment of student loans in a timely manner improves the credit record of the students and prepares them for access to more credit in future. Student loans can mean the big break in accessing future loans when students have access to good paying jobs and pay their loans without defaulting. Access to loans for mortgage, cars, further studies in accessing higher levels of education, among others are made possible through clearing student loans. Those who never used student loans may not have the advantage of information on their credit rating reducing their chances of accessing credit. When the student studies good majors, the chances of paying back the student loan is high, and they will augment their chances of getting other jobs providing another advantage of student loans. Student loans allow students to access to higher education augmenting their chances of getting better jobs, better pay, better standards of living, better chances of further education, and better position of providing a better life for their families. Student loans reduce the pressure on parents to provide better education for their children offering children from poor backgrounds a chance for equality in accessing better education despite their disadvantaged backgrounds. Students loans are offered at low-interest levels, provide the opportunities for deferment, and are lenient to the borrowers compared to other loans (Carmona and Thompson, 3). Subsidized loans are also available for students especially from the schools of higher learning and Federal government benefiting the students can access higher education at a subsidized cost. The arguments against student loans include that it creates a financial burden for the students that will last for between 10 and 30 years and may affect their ability to access healthy and better retirement. The financial burden also affects their ability to meet their daily needs and provides constant pressures that reduce the students ability to use their finances well and live to achieve higher standards of living. The views of parents, academicians, students, and experts reveal the struggle students undergo in terms of payment of student loans depict the financial burden hipped on students by the loans (Beckie, 2). Administrators and professors are reported to ignore their financial issues in the article by Carmona and Thompson (1) owing to the stress related to student loans that make one indebted for a long time. Inability to repay student loans within the set limit negatively affects person’s credit rating in terms of accessing funds for all other assets and property. The student-loan repayment information is shared among credit agencies including issuers of credit cards negatively affecting the persons affected. The financial difficulty of paying the student loan is compared with the inability of accessing other types of loans including credit cards, mortgage, and car loans, among others. Student loans increase the burden to the state through high rates of defaults by students as demonstrated by the baby boomers. The other argument against student loans is that they have to be repaid whether one completes college or not. In conclusion, student loans are more beneficial than they are detrimental to students through offering a channel to better lives from higher education, access to better jobs, better careers, and provide better lives for themselves and their families. A good credit rating, learning financial literacy, better utilization of their time in school, and access to better pay are the other benefits that come with taking a student loan. Student loans reduce parent’s pressure on funding education, promote equality in access to education, and have lower rates and possibilities deferment. Arguments fronted against student loans include financial burden that lasts for a long time, negative impact on credit rating, and the need to repay despite not completing college. Annotated Bibliography Beckie, Supiano. How Much Student-Loan is Too Much? Chronicle of Higher Education, Washinton DC, September 3, 2014. Retrieved from ProQuest on April 24, 2015. The article by Beckie Supiano takes a wide look at the student loan debates and is inclusive in its analysis. The article brings on board different views of various stakeholders and presents their views on the issue of student loans with the aim of finding the correct amount of student loans and provides an analysis in the end. The opinions of parents having children studying on student-loans, students who have borrowed or will be borrowing loans, academicians, recent graduates who utilised the loans and experts are taken in the article. The article provides the responses of the different stakeholders to allow for an independent review allowing for the attribution of the benefits and challenges that face students in the quest to achieve better education through taking student loans. The article brings about the challenges of student loans from the view of the users offering first-hand information making it an important source for use in the study. The article was published in Chronicle of Higher Education, which is a reputable publisher making the article a credible source for use in the research. The article also provides first-hand information from varied respondents augmenting its credibility further. Carmona, Norma and Thompson, Kim. How to Manage Student loan Debt. Chronicle of Higher Education, Washinton DC, February 27, 2004. Retrieved from ProQuest on April 24, 2015. Carmona and Thompson’s article, How to Manage Student loan Debt, clearly puts in context the financial burden that comes with student loans through relaying the issue of a professor and administrator avoiding their financial issues. The article goes on to provide mechanisms for managing student loans including, keeping good records, knowing the type of loans, lender, grace period, repayment period, borrower benefits, and the consequences of default. Other issues tackled in the article are thinking in the long-term, protecting one’s privacy, thinking about consolidation, and the resources that could aid in managing student loans. The article was published in the Chronicle of Higher Education, which is a reputable publisher in education matters, and the authors have a proven track record making the author credible for use in the study. The authors have also searched for credible sources to use in the study including government publications and federal guidelines and regulations on student loans making the article credible. Works Cited Beckie, Supiano. How Much Student-Loan is Too Much? Chronicle of Higher Education, Washinton DC, September 3, 2014. Retrieved from ProQuest on April 24, 2015. Carmona, Norma and Thompson, Kim. How to Manage Student-loan Debt. Chronicle of Higher Education, Vol 50 (25), Washinton DC, February 27, 2004. Retrieved from ProQuest on April 24, 2015. Read More