English Assignment

Running head: COLLEGE DEBT CRISIS 1

COLLEGE DEBT CRISIS 2

College Debt Crisis and Solution

Michael Gonzalez

Courtney Wood

ENG 215

November 19, 2016

Introduction

Higher education is considered one of the pillars of the American dream. Rightly, education is one of the areas where America has prided itself as the global leader with many of its universities taking first position in global ranks and leading in research in development and technology. Take for instance, the leading technology companies such as Google and Facebook were conceived while their founders were in still undertaking some course in the university. To find employment in a good paying job, you need an undergraduate degree for an entry position and a graduate qualification to be competitive in the job market. As the appalling situation continues to take center stage, people are becoming sentimental and even hopeless. The hopelessness persists because college debts present a dark future for the youth in America thus requiring an urgent solution (Mariah, 2015). The debt crisis has implications ranging from economic too social (Dynarski, and Scott-Clayton, 2013). For instance, with high college debts that attract high interest rates, the youths are likely to spend the rest of their lives toiling to repay the debt. Consequentially, people will have minimal resources to put into investments. On the social front, people will be unable to improve their lives in terms of having enough resources to access quality public services such as healthcare or even education. With these problems in the horizon, one ponders whether there is a reason to go to school. Most importantly, why gain education that enslaves? Away from the questions, it is crucial to focus on the problem at hand and focus on how to solve the problem. This essay looks at a blend of solutions that can be applied to solve the problem of college crisis.

Solution

There is no single solution that can solve the problem of soaring college debt rather a combination of approaches can be applied to solve the problems. This section presents a blend of scholarships, Pell-grants and income set off plans. In a higher education system that gives students multiple options, it would be easy to complete school debt free (Dynarski, and Scott-Clayton, 2013). The first aspect of the solution is sponsorships and scholarship. This is easy because scholarships can be funded by organizations that seek to back a noble course such as poverty eradication. In the current situation, people are graduating with huge debts. Additionally, the college debt has hit $ 1 trillion mark at the national level. Graduates especially those in low paying jobs cannot afford to pay for these loans (Akers, and Chingos, 2014). Grants and scholarships will go a long way in solving the current problem of college debt. When it comes to scholarship, students can be asked to do volunteer work to receive grants instead of receiving pay. Pell grants, which are federal can also be increased such that the students can be able to get a higher limit. Combining the Pell Grant with scholarships will make it easier for learners to go through school without accumulating huge debts. Another solution is for learning institutions to allow learners who have serious financial problems to go through school at no fee at all with the learners being given up to 20 years to start paying for their loans.

Economic Benefits

The leading economic benefit is that there is no cost attached to grants or scholarships when compared with the current debt causing a crisis (Mariah, 2015). The fact that most grants require people to have a record of academic excellence is a good pay off for many learners because almost all students can opt to work hard in order to get the scholarships. When Pell grants is increased people can pool together resources from Pell grants and scholarship grants to pay for school. This will lower the burden of tuition and other fees a student is required to pay to complete school. When the above solutions are coupled with the option to pay tuition after a given duration of time frees the student from debt because the student will go through school at no cost. Consequentially, the student will have enough resources after school through savings or from employment to pursue other economic activities such as investing or putting up a business.

Social benefits

The lives of individuals will exist. Usually, the level of debt is considered a hindrance to happiness especially when the debt is too high. Low college debt will improve the mental health of the individual. Additionally, the learners will have more resources to access vital human services of high quality such as healthcare. Previously, when a student graduates from college with more than 100,000 it becomes difficult for such a student to have a meaningful social life because most of the times they are preoccupied with questions on how to pay debt. Additionally, high debts will set people into poverty because they may have to acquire more debt to cover the present debt (Holland, 2015). A system of college finance that has a significant portion of costless grants could go a long way in making a turning point among the poor communities such as the African and Latinos, as well as the whites who come from a poor background. By freeing these groups from debt, it would motivate those who share the background to go to school to gain employable skills. With volunteer work in exchange for tuition, students acquire skills early that help them become better member of the society.

Equity benefits

Currently, the college debt is inequitable because it subjects all individuals to similar conditions yet not all people come from a common background. Learners from the rich and poor backgrounds are all treated in a similar manner. This is especially true when it comes to repayment. For instance, the extension of repayment period of 10 years given to learners by Obama only favors the rich. People take different career routes in college some have well-paying careers while others enter low paying careers (Field, 2009). Even when debt repayment period is extended, it only favors the upper end of graduates who enter highly paying careers such as medicine and law among others (Field, 2009). The proposed solution above is equitable because it offers all students equal opportunity and guarantees all the advantages for every student. It is even better for the less privileged learners because Pell grant is awarded according to their needs. Coupling this with the program to pay after being in employment for some time is equitable because the amount of debt will be low and by the time to repay arrives the graduates will have worked for some considerable time and will earn higher wages thus feeling no pinch to pay back the borrowed amount.

Conclusion

It is apparent that the college debt is increasing albeit worryingly. This could threaten the American dream, as well as subject many people to a life of poverty. Additionally, the individuals could also end up having a negative credit rating thereby affecting the ability of the student to borrow in future following the high level of debt. In return, a huge portion of the population especially the unemployed graduates with such debt could be unable to get into any meaningful business because they do not have adequate capital. It is true that a high cost of debt could have a significant implication on the future of many American presenting a setback instead of a stepping-stone. Similarly, it is also true that a creative solution could be the key in reducing the level of debt that learners accumulate in school. While there cannot be a single approach a blend of scholarships, Pell grants, and a pay later system are the best methods to apply.

References

Akers, Beth, and Matthew Chingos. 2014. “Is a Student Loan Crisis on the Horizon?” Brown Center on Education Policy, Brookings Institution.

Dynarski, Susan and Scott-Clayton, J., (2013). “Financial aid policy: lessons from research.” Future of Children, 23(1), 67-91.

Field, E. (2009). “Educational debt burden and career choice: evidence from a financial aid experiment at NYU Law School.” American Economic Journal: Applied Economics, 1(1), 1-21.

Holland, K., (2015). “The high economic and social costs of student loan debt”. CNBC. Retrieved on November 19, 2016 from http://www.cnbc.com/2015/06/15/the-high-economic-and-social-costs-of-student-loan-debt.html

Mariah, Y., (2015). “Student Loan Debt Is a National Problem That Needs a Solution”. AFL-CIO Now. Retrieved on November 19, 2016 from http://www.aflcio.org/Blog/Economy/Student-Loan-Debt-Is-a-National-Problem-That-Needs-a-Solution