ipl-logo

Case Study: The Trap Of Student Loans

1007 Words5 Pages

The Trap of Student Loans
Student loan debt is becoming an increasingly startling problem. Rising costs of college and lack of financial aid is driving students to take out loans that offer only high-interest rates and inflexible repayment options which can trap students in a vicious cycle of debt and default. The best solution to this problem is to have federal funds donated to all public colleges’ endowments yearly to use the money to offer more financial aid, require all public colleges to provide a minimum amount of financial aid based on expected income of the student and family, and to require that all student loans be subsidized with interest rates not exceeding 0.5%.
The costs of going to college have risen tremendously and are continuing …show more content…

As the price tag on college is shooting up and the amount of federal funds are minuscule in comparison, students are relying on private loans to cover their education (McGuire). Increasing federal funds would drive the need for private student loans down substantially, eliminating one of the biggest problems in the student loan crisis. A lack of private loans would mean a lack of sky-high interest rates that cause many borrowers to default on their payments. Student loans aren’t tightly regulated in terms of protections around interest rates and default which allows lenders to “[treat student loans] more like credit cards, with variable interest rates as high as 18% and terms set by the lenders” (McGuire). These unbelievably high-interest rates are what cause a big problem when repaying student loans. Due to the high-interest rates, when a borrower is repaying their student loans, the monthly payments may only cover the amount of interest accrued, if even that (McGuire). Private loan interest rates should be limited to 0.5% to help prevent those who must take out student loans from being unable to repay their loans on time because of inflated interest rates. With our current system of allowing lenders free reign of interest rates, by the time most people have paid off their student loans, they have paid far more in interest than they could have planned, if they were even able to keep up with the monthly bills. Interest rates for private loans should be much more tightly regulated to prevent lenders from overcharging people who were simply trying to seek out an

Show More
Related

  • Bernie Sanders's Argument In Favor Of Social Work

    490 Words  | 2 Pages

    Lowering the interest rate of student loans can help students afford to pay back. This is so important because many students have gone into default because they could not afford to meet their monthly payments. While lowering interest rate of student loans, he referenced about free tuition. Free tuition in the United States would give people an opportunity to go to college and receive a degree to better themselves in society. While doing that, it may cause the unemployment rate to decrease.

    Read More

  • Argumentative Essay: The Issue Of Student Loan Debt

    1032 Words  | 5 Pages

    According to the last recording of student loan debt, the total amount of the United States student loan debt is roughly one and a half trillion dollars (A look at…). Statistics like these present the urgent need to resolve the major financial issue of student loan debt. Solutions have been given by many people to solve this issue but most solutions fail. The main reason behind student loan debt is falling to far into debt to the point where it is almost impossible to come back. The origin behind all of this is a lack of a student loan amount cap.

    Read More

  • Student Loan Debt

    301 Words  | 2 Pages

    Many Americans believe they can not graduate college debt free. They, in turn, take out student loans that in the long run will cause debt to pile up. Many statistics show the negative effects of student loans. This helps prove the idea that student loans are, in fact, are a major factor of high levels of debt. Also student loans and debt can be avoided with financial aid programs along with grants and scholarships.

    Read More

  • Persuasive Essay On Student Debt Crisis

    1228 Words  | 5 Pages

    The student loan issues are causing huge problems on both students and society it seems clear enough that students are borrowing a lot of student debt, and they are failing on that debt and aren’t capable of paying it back and that is destroying their ability and threatening their ability to access any more credit in the future. The approaches students are taking to a student loan debt collection are fraught with many problems, including bad recovery tactics and failing on making repayments on the debt. There is no escaping the fact that the cost of college tuition is on the rise and it’s not declining, and that is making it more difficult for students to obtain a degree which is really important to acquire to be able to function in today’s

    Read More

  • Student Debt Argumentative Essay

    901 Words  | 4 Pages

    The total U.S. student loan debt now surpasses $1.2 trillion and there is more than 40 million recipients owing on federal and private student loans (Malone). Most of the college students in the United States can’t afford their education by themselves and, as a result, students end up drowning in student loans in order to earn a degree. Student debt is a major problem in the US, and it is a major influence on the gap between rich and poor. A more accessible college education would help reduce the gap between rich and poor in the United States.

    Read More

  • Arizona More Funding Essay

    1229 Words  | 5 Pages

    In European countries such as Germany, the government has begun to pay for higher education to help future citizens have the option of higher education. Persistently students today are enchanting out student loans to have enough money for college. Students should be prevented from being charged so widely and shouldn’t be deprived by student loans. Since student loans are pouring students into a debt to the point where students will be working to pay off their student loans. Congress is trying to cut federal debt, while they struggle to reduce debt; tuition repeatedly increases to the point where student debt has surpassed credit card debt.

    Read More

  • Student Debt: The Collegian By Tristan Korff

    693 Words  | 3 Pages

    Korff states that by the federal government paying back our loans, the universities will just raise tuition once again, and we will find ourselves in the same situation once again. Korff continues, Universities know that most students can’t afford college. But they also know that the government will help pay for what students can’t afford. Korff argues that eliminating all student debt for one generation is not a permanent solution, and the consequences could be severe for generations to come. When it comes to persuading his classmates, Korff succeeds admirably.

    Read More

  • Argumentative Essay: The Cost Of College

    771 Words  | 4 Pages

    The tuition and cost of college is detrimental to thousands of families across the country and brings student debt to future graduates. Some students have seen their debt climb over $30,000. Friedman writes, “The average student in the Class of 2016 has $37,172 in student loan debt…” (Friedman). With the debts being over the average income for single people households, college has transformed from a benefit to a burden. Young adults not only have to worry about their education but also paying for the next semester or years of college ahead of them.

    Read More

  • Essay On The Cost Of College Tuition

    1145 Words  | 5 Pages

    Since tuition has risen 3 times higher the rate of inflation in the past 10 years, this increase a student’s chances of not being able to afford higher education and also gives them a better chance of accumulating debt post-graduation. Some people think that the college education they acquired did not fit the amount they paid for it, even if they pulled out loans or were an ideal candidate for a scholarship. This is a scary fact because higher education can determine if you thrive

    Read More

  • Student Loan Forgiveness

    1994 Words  | 8 Pages

    Loans allow receiving a college education seem like a smoother process considering that such a hefty amount to pay is divided so that it can be paid for in moderation. Despite the fact that it’s split into many payments, it’s still a large quantity all in all so unless indebted students aim for high income jobs, there would many years of difficulty to come after college. For this reason, undergraduates make it their goal to go after jobs which would prevent them from being constantly pressured to pay off debt. Thus, student debt is both a crisis and a reason to encourage persistence towards greater ambitions (Hillman, 41). It is a tremendous thing when a student seeks to be financially comfortable or even rich in the future but not when it is for the wrong reasons.

    Read More

  • The Pros And Cons Of Student Loans

    585 Words  | 3 Pages

    Student loans have always seem to be a controversial topic. Many people are in agreement and disagreement over the opportunity to student loans. Student loans can be a great advantage to many students, but it can also drown them in an immense debt, that will follow them for many years. The more we analyze this perspective, we are able to distinguish the advantages and disadvantages of student loans. There is a variety of perspectives on student loans, some involving annual salaries, interest rates, and commodity.

    Read More

  • Argumentative Essay On Student Loans

    378 Words  | 2 Pages

    Student loan debt loads have been spiraling, doubling over the last decade, and the enrollment rates of young people from lower socio-economic groups are rising far slower than middle and upper groups. Governments must recognize the renewed public investment in post secondary education is an economic and social imperative. 6.7 million borrowers in repayment mode are delinquent (Snider 1). The sad fact is that many lenders aren't exactly incentivized to work with borrowers. Unlike all other forms of debt, student loans can't be discharged in bankruptcy.

    Read More

  • Argumentative Essay: The Rising Cost Of College

    1265 Words  | 6 Pages

    Have you ever owed someone $20? Well, imagine owing someone $100,000+ . Many students every year are left in crippling debt that can affect them for the next few decades of their life. Because of the cost of college, many students fresh out of high school can’t go to college. In order to make it easier for the lower-class to go to college, you should do at least one of the following things.

    Read More

  • Argumentative Essay On Student Debt

    1437 Words  | 6 Pages

    Society often believes college is a necessary experience for a better future, but I argue that the future will not be any better when student debt becomes a part of life for those who follow that mainstream belief. Most parents often dream of the great colleges and universities that their children will get accepted into; however, they fail to think of the cost to attend those institutions. Financial aids! Financial aids! Yes there are financial aids that students can apply to lessen the student debt.

    Read More

  • Rising Cost Of College Essay

    817 Words  | 4 Pages

    According to the New York Times, “about two-thirds of bachelor’s degree recipients borrow money to attend college, either from the government or private lenders, according to a Department of Education survey of 2007-8 graduates.” On average since 1980, college tuition prices rise 7% a year. In comparison, the inflation rate is just 3.2%. But we have to remember that as long as the demand for higher education continues to rise, the price will also rise. In order to pay for the absurd prices of higher education, students should not have to end up turning to loans.

    Read More

More about Case Study: The Trap Of Student Loans

Open Document