In 1958 Us Government was allowed to borrow money from college for higher studies. But ad lib access to student loans has put a large number of borrowers in debt. People of the United States shouted to cancel the student’s loan and termed this as a ‘failed policy’.Let’s find out Why is student debt a problem for USA.
Student Loan Program In USA
It all started with the space race. In 1957 Russia launched Sputnik satellite into space. Fed up with Russia’s success in space USA government felt their citizens are fallen behind in science and technology. In 1958,34th president of the USA Dwight D. Eisenhower signed a bill that allowed students to borrow $1000 a year as a student loan from the federal government. In those days it turned out to be successful. In 1960 there were 3.6 million students took admitted to the college, within 10 years the number jumped up to 7.6 million. In 1967, the Bank of North Dakota made the first federally-insured student loan. Student Loan programs helped economically ill students to pursue their studies.
Student Debt Is A Headache
One of the primary reasons for the increase in student debt percentage increase in tuition fees in public colleges. Between 2008 to 2018 the college fees rose to 37%. Besides college education costs, living costs in America skyrocketed wages remain stagnant.
Another problem students face after taking a student loan is unable to complete a college degree. One out of five students in public 4-year colleges and one out of three students in community colleges did not complete a degree. Those students, without good earnings, are unable to reimburse their borrowed money year after year.
Many activists from in the USA have raised their voices against student loans. They demanded immediate cancellation of this unethical policy. President Joe Biden has said his administration is thinking of canceling up to $10,000 in student debt for borrowers.
In the USA due to inflation people are already depressed. The job market becoming competitive day by day. More students feel unsafe without at least a graduation degree. For further higher studies, they are borrowing more. Post-college master’s degree and Ph.D. program student has taken around 40% of total student debt.
Every year millions of students are borrowing student debt while current borrowers are struggling to reimburse their existing loans.
Many students can’t pay their debt due to financial crisis which mushroomed their debt balance with interest.
Within 20 years the student debt could hit $3 trillion if appropriate steps are not taken immediately.
Student loan borrowers demanded a lower interest rate. Making the least interest rate would help borrowers to reimburse the debt money quickly. Some debt borrowers also demanded zero interest rates and termed growing interest rates as the major obstacle.
Pell Grants nowadays cover only 28% of college fees compared to earlier numbers of 80%. Pell Grant helps low-income students. Pell Grant should be doubled from their current maximum of $6,495 to meet the cost of college students.
The racial inequality in the student debt program causes burdens on black borrowers. The average wealth of a black family in the USA is $17,150, while the average wealth of a white family is $171,000. The racial wealth gap is thus approximately $153,850.The present average value of loans in the white family stands at $6,157, while $10,630 for black families. These amounts are unconditional for a student loan holder
The government should lower the tuition fee in colleges and universities. In colleges, some unnecessary subjects classes are joined by few students but students have to pay for those classes as tuition fees from their pocket. Canceling the student debt is the best solution according to most citizens of the US. Activists hope that public demand can help Biden to cancel student debt. Some activist urges the student to cancel at least some portion of student debt.