CRISIS IN STUDENT LOANS 1
Crisisin Student Loans
Student loans refer to funds that are provided to enable applicantsenroll in learning institutions. In many instances, student loanscater for degree programs in colleges and universities. Prospectivebeneficiaries are required to submit accurate information to qualifyfor such resources (Gale, Harris, Renaud, & Rodihan, 2014). Somepart of the loan caters for tuition while the rest is used to financeupkeep. Students must also pledge to repay the money at the earliestopportunity (Looney & Yannelis, 2015). Notwithstanding, manypeople have failed to service their loans. In this paper, I willargue that student loan debts can be serviced through regularrepayments to avoid hindering prospective learners.
Notably, student loan debts have increased significantly due toseveral reasons. Firstly, the high rate of unemployment has preventedmany students from securing jobs (Gale et al., 2014). The slow growthrate of the economy has caused panic in most organizations. Hence,the number of layoffs has increased substantially over the past fewyears. Companies have halted their recruitment programs to limittheir overhead expenses. It is quite challenging for graduates topenetrate the job market. Salaries have also been lowered asemployers seek to reduce their wage bills (Gale et al., 2014). Thelack of jobs has made it impossible for many students to repay theirloans.
The academic qualifications required to obtain basic employmentpositions have been raised. Graduates are forced to seek moreopportunities for higher learning to enhance their suitability foremployment. Doctorate programs are quite expensive since they areprovided in select institutions. Rather than work to pay for existingloans, advanced students increase their liabilities by pursuinghigher learning (Gale et al., 2014). Therefore, the passage of timecauses the debts to increase beyond manageable levels.
Besides, some unscrupulous employers propagate dishonest practiceswith regards to student debt loans. Employers are usually required tosubmit monthly portions of a person’s salary to relevantauthorities (Gale et al., 2014). However, some may decide to withholdpayments due to greed. Student loan debts can increase despite thefact that required deductions are made. Dishonest people may alsofail to declare their loans while seeking employment (Looney &Yannelis, 2015). Many individuals fail to pay their student loanseven when they participate in self-employment initiatives. Suchnegligence causes an increase in student loan debts.
In addition, some students register for loans using fake details(Looney & Yannelis, 2015). It is impossible to track repaymentswhen people use fictitious names. Bank details on applicationdocuments may also be falsified. Hence, the relevant authorities areunable to recoup the money provided as loans. A designated interestrate is customarily imposed on student loans. However, the passage oftime may cause an increase in interest rates. Fines could also beplaced on unexplained defaults in payment (Hillman, 2014). Somepeople experience serious injury or death that renders them unable toservice their student loans. Hence, the debts remain unpaid over along period.
The issue of student loan debts is quite significant due to variousfactors. Individuals that fail to service their loans acquire lowcredit ratings (Looney & Yannelis, 2015). Hence, it becomesharder for such people to acquire loans in future. Some employers mayalso be unwilling to hire persons with high student loans. In thisregard, applicants with an extended record of defaulting could bedisqualified since employers view them as dishonest and unreliable(Hillman, 2014). People who avoid repayments despite their employmentstatus can also be arrested and prosecuted. Subsequently, fines andother punitive measures can be imposed to encourage compliance. Anincrease in student loan debts denies new learners the opportunity toreceive financial support. This is because the government provides aspecific budget for each sector of the economy (Mueller, 2015). Theeducation sector is undermined when additional funds are needed toprovide student loans.
Student loan debts have plenty of ramifications for the learner. Itis impossible for most people to afford the level of educationoffered at institutions of higher learning. Ivy League institutionssuch as Harvard, MIT, and Stanford usually admit internationalstudents capable of paying tuition. Persons from poor households haveto apply for unattractive courses in less recognized institutions. Inthis regard, some universities have established donor programsdesigned to sponsor deserving students from needy backgrounds. Thegovernment makes enormous contributions to these funds. Recipientsmanifest their gratitude by pledging to repay their loans. Debtsreduce the amounts of money available to sponsor other students (Galeet al., 2014). Hence, such students miss out on achieving theircareer goals.
Students can adopt specific techniques to manage their debt. Forexample, individuals can make regular contributions to reduce theirliabilities. The lack of employment should not deter graduates fromsending regular remissions. Small payments are acceptable dependingon a person’s circumstances. The relevant authorities wouldappreciate the effort put forth in repaying the loan. In fact,regular payments eliminate the possibility of fines and fix theinterest rate imposed on the loan (Gale et al., 2014). It would helpto seek funds from family, relatives, and friends. Financial helpfrom trusted persons can offset the need to apply for additionalloans. Collected funds could cater for the required tuition fees andupkeep. Students may also use their academic performance to seekassistance from local initiatives.
Future students could minimize their loan debts by applying forgrants from charitable institutions (Berends, 2014). In this respect,learners would get the required funds without the obligation torepay. Besides, future students should focus on excelling in theiracademics to qualify for full scholarships (Berends, 2014). Suchrewards are usually reserved for the most deserving students. Somescholarships are granted due to excellence in sports, music, andother co-curricular activities. Hence, future students can increasetheir participation in non-academic pursuits to enhance their chancesof obtaining scholarships. Moreover, parents can enroll theirchildren in cheaper schools while they save money for highereducation. Future students may also want to consider doing shortcourses in vocational institutions. Although such schools may beviewed as less glamorous, they teach practical skills. Consequently,future students can minimize their loan debts.
Indeed, student loan debts can be reduced through small, regularpayments to avoid inconveniencing new applicants. The high rate ofunemployment has prevented many graduates from penetrating the jobmarket. Other people have decided to seek additional qualificationsto obtain higher professional credentials. Both employers andstudents may decide to withhold required payments. Registration withfake details hinders the relevant authorities from making claims.Student loan debts weaken a person’s credit status and coulddissuade employers from hiring the individual. Failing to makerepayments may deny other applicants the right to benefit fromfinancial support. Serial defaulters may also be liable forprosecution in a court of law. However, students can service theirloans in small repayments over an extended period. These remissionswill gradually reduce their debts and improve their credit status. Inaddition, students can acquire grants and donations that would notneed repayment. It would help to apply for partial and fullscholarships from charitable institutions. Consequently, current andprospective students can experience gradual reduction in theirliabilities.
Berends, M. (2014). The evolving landscape of school choice in theUnited States. Handbook of Urban Education, 451-473.
Gale, W., Harris, B., Renaud, B., & Rodihan, K. (2014). Studentloans rising: An overview of causes, consequences, and policyoptions. Washington, DC: Urban-Brookings Tax Policy Center.
Hillman, N. W. (2014). College on credit: A multilevel analysis ofstudent loan default. The Review of Higher Education, 37(2),169-195.
Looney, A., & Yannelis, C. (2015). A crisis in student loans?:How changes in the characteristics of borrowers and in theinstitutions they attended contributed to rising loan defaults.Brookings Papers on Economic Activity, 2015(2), 1-89.
Mueller, P. (2015). The Non-Dischargeability of Private StudentLoans: A Looming Financial Crisis. Emory Bankruptcy DevelopmentsJournal, 32, 229.