Will Student Debt Rule the World?

Anyone who has ever been to college has probably heard a lot about a student loan – a special type of financial aid that allows you to borrow money to cover your tuition and then pay it back after you graduate and find a job. But, even if you’ve heard about it, it doesn’t mean you really know what it is all about.

For years, such loans have been considered a great opportunity for young people who can’t afford to pay high tuition fees. But, the situation has changed drastically over the past years. Today, there is a common belief that borrowing money for education doesn’t give you a chance of a lifetime, but rather gets you trapped. Let’s try to figure out what is in it for students!

The Story Behind Student Loans

Student life has always been full of challenges, both small and big ones. Throughout decades, acquiring a degree has been associated with many hours of lectures, stress and loads of homework. This all results in an absolute lack of personal life, and eventually leads to burnout. But, while some things cannot be changed, today, young people have plenty of opportunities for making their lives simpler.

After all, we are living in a time when you can simply say “I need an EssayPro writer to do my math homework” and get quick assistance from a real pro and a high grade for pretty much any assignment. This way students can somewhat regain control of their lives. And, even though there still might be other issues, they don’t seem as critical when you have someone to get your back.

But, college debt is different. No matter how many challenges you are going to face while studying, none of them can compare with the burden of a student loan.

So, Where Did It All Start?

If we look back into history, we will see that higher education has long been a privilege that not everyone could access. With time, it was getting more available for different groups of people. But, despite the long path we’ve been through, now pursuing higher education is still a privilege, though the reasons behind it are different.

The biggest problem we’ve been facing in the past decades is the high cost of tuition. Due to this, the federal government decided to start guaranteeing loans to help young people afford their education. The first loans were granted back in 1958. Since then, it has been considered a life-saving opportunity for everyone who cannot afford to pay tuition.

But, is it really aid or rather a trap for modern students? Opinions vary. In order to sort this matter out, it is vital to look at the root of the problem. So, let’s move on and see what are the biggest pitfalls of this type of loan.

Student Debt Crisis

Ever since the first financial aid programs like these were launched, the system seemed to work pretty smoothly, but only until the 2000s. That’s when the situation spiraled out of control.

Starting from 2000, due to rapidly growing tuition fees, high unemployment rates, and many other factors, the overall amount of student debt in the US started to skyrocket. And it continued to grow all the way to 2021, hitting a record number every single year.

At this time, the overall amount of money that Americans owe for their education has reached another critical point – $1.7 trillion, which is greater than the entire economy of Canada. And, what is even worse, this tendency doesn’t decrease.

This led to a massive student debt crisis. While the amount of money owed kept growing, the pace at which graduates could pay out their loans was only going down. As for the last year, the average American borrower needed as many as 20 years to pay off the money. For some jobs, this time was more than twice higher – 45 years to get out of the student debt. 

Given that the debt balance tends to increase significantly every year, this causes a debt trap that seems to have no end.

The Effects of Student Debt

If you think about the effects of this crisis, chances are that you will start pondering about the drawbacks it has for graduates themselves. That’s true. Owing money for your degree indeed implies plenty of disadvantages. However, the real effects of growing student debt are much more all-encompassing and far-reaching.

Let’s start with the obvious effects. From a borrower’s perspective, there are several key drawbacks:

• Lower credit scores – first of all, graduating with a loan ultimately puts a student’s credit score at risk, and the longer it takes to pay it off, the lower the score will get.
• Limited purchasing power – lowered credit scores put certain limitations on borrowers. Unlike their peers who don’t have a debt, they will be limited in purchasing property and making other big purchases.
• Poorer life quality – low credit score, limited purchasing power, and the necessity to give away lots of money every month eventually lead to a significantly poorer quality of life.
• Excessive stress – resulting from all that has been mentioned above, borrowers end up experiencing too much pressure and stress, which even worsens their situations and can lead to numerous health issues.

So, these are the main negative side effects that borrowers will feel themselves. But, in fact, there is more!

Although many don’t even think about it, growing student debt affects not only borrowers themselves, but also the entire country. Not being able to fully participate in the country’s economy, borrowers cause significant damage to the economy in general.

They can’t use all the banking services, can’t opt for a mortgage, or purchase all sorts of goods. Respectively, they don’t help the country’s economy to grow and strengthen. And this fact, in its turn, can lead to an even more all-encompassing crisis that can affect millions of other people.

Due to the high pressure and the hazards student debt holds for the US economy, the government is urged to start addressing this issue. To battle the problem, currently, President Biden promises to reconsider the laws that regulate such loans and forgive borrowers at least a part of what they owe.

The Bottom Line

So, will student debt continue to rule the world? Probably not.

As the amount of debt keeps mounting, and giving its negative effects, this huge chapter in US history might be slowly coming to an end now. The cancellation of debts (also known as forgiveness) is gradually becoming a new mainstream. There already have been multiple cases of forgiveness in different parts of the country. And, it seems like this trend will continue.

Due to these reasons, many experts believe that this loan bubble is about to burst. What will this mean for students? Well, there are both pros and cons. For freshmen, this could mean fewer opportunities for affording their education. However, for those who are already studying and those who have long graduated owing a whole bunch of cash for their degree, this would mean a massive relief and a possibility to start living their best life sooner.