Cole Burgess

Research Project
Mary Barker POLS-1100
December 11, 2015
Federal Aid and Student Loan Crisis
Today in America there has been a financial crisis among college
students who require a form of financial aid to assist in the debt of school.
One of the most common forms of the financial aid that student take
advantage of is government and private loans. Although loans may typically
be pictured as a negative option, leaving students with high payment after
they graduate. However it is all part of a bigger picture in which President
Barak Obama has set a national goal to have the highest proportion of
college graduates in the world by 2020.1 To achieve this goal he passed the
Education Reconciliation Act, which gives students more options on how to
repay their loans prior to graduation. The hope with this act is to encourage
students to take the loans necessary to complete their schooling, rather than
drop out due to financial instability. Although loans can leave a student with
debt, they can be very beneficial to people in various circumstances.
Student loans can lead to a better financial future for a student who would
have otherwise never been able to afford school at all. It is in this way that

1 https://www.whitehouse.gov/issues/education/higher-education

writer for Forbes, Robert Farrington says that student loans are good debt,
because they improve your financial future (Farrington, Forbes).2 In a nut
shell this is stating that although a student who accepts these loans will have
a debt to pay prior to graduation, it will be worth it due to the potential that
the student has to earn a much higher income. During a study that was
conducted by The U.S Department of Education, they found that those who
earn a college degree can see theyre initial earning jump at least 25% on
average compared to that of a high school graduate.3 This extra 25% should
be plenty to cover the extra cost brought about by the loans the student
accepted.
This extra 25% in earnings makes taking loans seem like not such a big deal.
However one of the major arguments against student loans is the increasing
difficulty to find a job to make that extra 25% and pay of student debt. This
is when the major issues arise leaving students jobless and with large
amounts of debt. According to a study done in San Francisco in 2014, about
80% of graduating seniors did not have a job lined up even though 72% said
that they were looking for one.4 Anyone could agree that these numbers are
far larger than they should be. That means that the majority of graduates are
stuck in debt with no consistent income to pay it off. However with the
2 http://www.forbes.com/sites/robertfarrington/2014/04/21/student-loan-debt-thebest-and-worst-debt-to-have/
3 http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/
4 http://employer.aftercollege.com/83-college-students-dont-job-lined-graduation/

Education Reconciliation Act passed by Obama, students will now be given a

grace period with more time after graduation to search for a career before
they must pay their debt. Along with this, student debt will be forgiven after
20 years of monthly payments if the total amount owed is not reached.
Student loans may be looked at as a negative aspect of going to a university
by most, but not by all. In some cases they may be very valuable to the
success, or even the attendance of a student who has financial hardships.
With stats showing the average college graduate who finds a job making a
substantial amount more than a high school graduate, the debt that they
acquire should be little to no issue to pay off. Although the debt acquired is
typically looked at as a negative thing, people have to also see that in some
cases, this is the only option to secure a strong financial future for an
individual. Overall the cons of student loans such as debt, are far more minor
than the pros, such as having a well-paying job to create a better financial
future for an individual.
This is one side of the controversy between if student loans are
beneficial to students or not. This argument is trying to prove that student
loans can be very beneficial to students who have financial issues but would
like to create a more stable financial future. The other side of the argument
is that student loans leave students in too much debt after they graduate
and are therefore not a positive thing. Here is the argument made by Mateuz
for that side of the discussion.

Mateuz Hernandez
The student loan crisis, a topic that has increased dramatically over
the last several years, is making its way into the media more as time goes
on. With thousands of people applying for loans to pay for college, and
getting those loans with ease.
Many people who go to college depend greatly on student loans to pay
their way through school. However, once the student has gotten there
degree and career, they find themselves struggling to pay the loan off on top
of their other payments as house or car payments. In a survey taken in 2014
found in the article Bankruptcy + Student Loan Debt Crisis written by
Brenda Beauchamp, they found that about 37 million people have student
loan debt. The article continues to state that the accumulated debt totals
$994 billion.5
The student loan crisis has become so normal into todays society, that
many oversee it as just a part of life now. However, the effects of this crisis
stretch back as far as the 1980s. An example the loan crisis effecting people
comes out of an article published in 2013 entitled Loans Against Your Life.
The author Charles Scaliger describes the situation of a man named Matthew
Bridges (name was changed for privacy reasons), who took on loan in 1984
to help pay his way through school. As of 2009 he had obtained a Ph.D., and
had been married for 19 years, but due to the inability to pay his student
5 http://digitalcommons.tourolaw.edu/cgi/viewcontent.cgi?
article=2541&context=lawreview

loans on time, on top of his other living payments, he has gained an interest
rate of 30 percent.
Although this is only one specific case, there are thousands of people in the
United States, who are suffering the same fate as Matthew Bridges. When
the vast majority of people over the last thirty years have accumulated debt
that takes so much time to pay off, the result leads to a net loss. Over the
last year there is an estimated 40 thousand people are now dealing with
student loans, with an estimated $1.2 trillion of debt still unpaid.6
In lite of these facts, the government has recently raised the maximum
amount for the Pell Grant from $5,550 to $5,975,7 in hope that this will aid
students to pay collage without having to take out as many loans. In addition
to raising the maximum on the grant, the United States government will also
provide 820,000 more grants by 2020.
The main cause of the debt that students are faced with after they graduate
is the impossibly high costs of attending a university. In other countries all
over the world seeking a higher level of education is not only more
encouraged but often times free or much at least much cheaper than that of
the U.S. The cost of higher education has surged more than 500 percent
since 1985 according to a study conducted by value colleges, a site that
looks at the stats of colleges all over the world. This means that the U.S has
6 http://money.cnn.com/2014/09/10/pf/college/student-loans/
7 https://www.whitehouse.gov/issues/education/higher-education/investing-in-pellgrants-to-make-college-affordable

not always had these exuberant tuition costs. Evidently, in 1990 the U.S
gave the most degrees out of all of the countries in the world, and today is
ranked twelfth. Therefore the solution to this crisis would be to lower tuition
fees for 4 year institutions in an attempt to encourage more students to seek
a higher level of education.

Bibliography:
"Student Loan Debt: The Best and Worst Debt to Have." Forbes. Forbes Magazine, 1 Apr. 2014.
Web. 28 Oct. 2015.
"Ensuring That Student Loans Are Affordable." The White House. The White House. Web. 28
Oct. 2015.
Rutt, Jennifer. "83% of College Students Don't Have Job Lined up before Graduation AfterCollege Employer Blog." AfterCollege Employer Blog 83 of College Students Dont Have
Job Lined up before Graduation Comments. 7 May 2014. Web. 28 Oct. 2015.
http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=b528ae9e-6812-4647bda3-0e5c9d47ed61%40sessionmgr120&vid=6&hid=110

http://www.huffingtonpost.com/michael-restiano/there-is-a-student-loanc_b_8148470.html
http://www.cnbc.com/2015/06/15/the-high-economic-and-social-costs-of-studentloan-debt.html
http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=b528ae9e-6812-4647bda3-0e5c9d47ed61%40sessionmgr120&vid=24&hid=110