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Why Student Loans Should Be Canceled

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    Associates, bachelors, masters, doctorates. These words sound great, don’t they? Empowering? They seem to be the dreams of many but—why doesn’t everyone go for it? Unfortunately, the biggest factor in this decision-making process isn’t due to intelligence, distance or motivation, it’s money. Average student debt after a four-year education is around $38,000 (Students & Debt, 2019) with a four percent interest rate. Since that amount is typically paid off in installments, that means the average graduate will be paying that amount for almost ten years. With those statistics, why wouldn’t many look for an alternative?

    To better understand the reasoning behind much of the upcoming points, it is important to note the statistics on the current cost of going to college and the people who usually don’t have the luxury of pursuing a higher education. The onerous debts sabotage the ability of a college education to serve as an instrument of upward mobility for many disadvantaged groups. The students from the poorest families are forced to take on the highest amount of debt. Women hold about two-thirds of all student loan debt in the United States, and since they still earn less than men make for comparable work, women pay their loans off more slowly, incurring higher interest payments (Heuvel, 2018). Currently, the average tuition rate in the United States for public colleges is $9,650 for state and/or community colleges and $34,000 for private colleges not including schooling for a master’s or doctorates degree. This brings the total current student loan amount in America up to $1.6 trillion with no end in sight (Backman, 2017). The idea of canceling student loan indebtedness would not only bring in a new wave of qualified students that were never able to afford higher education but provide the financial freedom to focus on one’s growth and career after graduation.

    Although the decision of pursuing an education is ultimately up to one’s self, the burden of additional financial strain should not be something that a future valuable member of the society should have to deal with regardless of the career choice. Due to such high tuition rates, so many potential students now choose to not go to college. People who may have become great doctors, professors, engineers, etc. are not even an option in the work field due to the fear of the price tag that comes with it. If colleges and universities have a selection process in place to make sure they are accepting motivated students, then they know they’re accepting students based on talent and drive, not money.

    When students are given such a heavy financial burden to carry, it usually comes with some anxiety and/or depression. According to a study done in 2019, 65% of student loan borrowers lose sleep at night due to stressing over how they are going to repay their student loans and over 43% of student loan borrowers say their loans have interfered with purchasing things they want or need such as a car, home, etc. because it worries them to have additional debt (Bond, 2019). This is not to say that if a student does have a mortgage payment, food and other necessities, then this stress would only be doubled. Student debt causes a stress that may also be projected onto the workplace and home and it may hinder a person from showing their full potential due to having debt on their mind. Going for a master’s degree or even a doctorate only adds on to the amount of debt, time needed to pay off the loan off and stress.

    With having such a large national problem, many businesses and universities have taken initiative to try to put an end to this growing issue. There are many successful plans that are currently in place and are in the process of being placed. For example, New York University’s medical school announced that they are a tuition free school (Doubek, 2018). What this did is it stopped being an option to mostly higher income applicants and became available and at reach for lower income students who also had to earn their place at NYU with their grades. Another example of solutions that can be placed is the Public Service Loan Forgiveness (PSLF). The PSLF was established in 2007 for public sector and nonprofit enterprise employees to pursue educational loan forgiveness. They examined what the difficulties were for physicians what they needed to be eligible for that program. The data showed that the program limited maximum loan forgiveness but the people who applied for the program were offered complete forgiveness only after 120 monthly payments towards their student debt. The data also showed that participation in the PSLF among medical school graduated grew over 20% per year since 2010. The most advertised repayment programs are income driven plans including ‘Pay As You Earn’, which allows graduates to pay a minimum of 10 % of their monthly discretionary income to loan repayment which allows physicians to achieve loan forgiveness after 240 payments that fluctuate with the income being earned (Freidman, et. Al. 2016). Many other businesses are starting to add a student loan forgiveness program (SLFP) in the workplace and it is being used as a recruitment tool and job retention mechanism without pressure on the potential employees. This mechanism gives the employee a positive incentive to simultaneously work to make income and removing their debt (Fakunmoju, et. Al. 2016).

    Although the motive of this paper is to enlighten the reader as to why student debt should be cancelled, it is also important to note the difficulties that lie under this idea. With loans being on an upward trajectory, budgets are not able to fulfill the goal of trying to solve this national problem. Taxes and budget cuts cannot keep getting cut from other areas to meet the growing number. Along with that, according to some plans that have already proposed, if it were done on an income basis, the more you make, the less you’d get in cancellation. This plant wouldn’t penalize people who over-borrowed for their college education, it penalizes people who put their higher education funds to good use (Farrington, 2019). There has yet to be a perfect middle ground that wouldn’t hurt all taxpayers and the students.

    Another downside to student loan forgiveness programs are job limitations. If a graduate want to enroll in a federal student loan forgiveness program, it limits the jobs that one can take. While it is great for graduates who are interested in working in the public sector or who are passionate about teaching, these career paths may not be everybody graduate’s first, second or even third choice. It can be a major compromise.

    Conclusion

    Overall, student debt is and continues to be an issue with students in the United States and it is causing the nation to miss out on potential doctors, accountants, nurses and so many more employees just from the fear of not being able to pay back student debt. With more scholarships being given out and canceling student indebtedness overall, the liberation and drive that comes with it can only benefit the work force which can then benefit society.

    References

    1. Backman, Maurie. (June 22, 2017). Now even high earners can’t afford college. Retrieved from: https://money.cnn.com/2017/06/22/pf/college/afford-college/index.html
    2. Bond, Casey. (May 14, 2019). 7 Scary Numbers That Show How Bad Student Loan Debt Is For Mental Health. Retrieved from: https://www.huffpost.com/entry/student-loan-debt-mental-health_l_5cd60660e4b0796a95dc15a0
    3. Doubek, James. August, 2018. NYU Medical School Plans Free Tuition For Those Studying To BeDoctors. NPR. Retrieved from https://www.npr.org/2018/08/17/639467023/nyu-medical-school-says-it-will-offer-free-tuition-to-all-students
    4. Fakunmoju, Sunday B.; Kersting, Robert C. October 2016. Perceived Effects of Student LoanForgiveness on Turnover Intention among Social Workers in Massachusetts., 61(4): 331-339. 9p.
    5. Farrington, Robert. (June 6, 2019). The Moral Hazard of Student Loan Forgiveness. Forbes.Retrieved from: https://www.forbes.com/sites/robertfarrington/2019/06/25/the-moral-hazard-of-student-loan-forgiveness/#150fd453364c
    6. Farrington, Robert. (June, 6 2019). Most Total Student Loan Forgiveness Plans Are A Bad Idea. Forbes.Retrieved from: https://www.forbes.com/sites/robertfarrington/2019/06/06/most-total-student-loan-forgiveness-plans-are-a-bad-idea/#790c53277c66
    7. Friedman, Ari B., Justin A. Grischkan, E. Ray Dorsey, Benjamin P. George J Gen. 2016 Oct, 31. Forgiven but not Relieved: US Physician Workforce Consequences of Changes to Public Service Loan Forgiveness. doi: 10.1007/s11606-016-3767
    8. Heuvel, Katrina Vanden. (June 2018). Americans are drowning in student-loan debt. The U.S. should forgive all of it. The Washington Post. Retrieved from https://www.washingtonpost.com/opinions/americans-are-drowning-in-student-loan-debt-the-us-should-forgive-all-of-it/2018/06/19/82565218-7314-11e8-9780-b1dd6a09b549_story.html
    9. Students & Debt. 2019. Debt.org. Retrieved from https://www.debt.org/students/

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