There has been much attention recently given to the looming student debt crisis. Stories about coping with debt and the soaring cost of college are all too common. Some are even suggesting that this could be a pivotal issue in the upcoming elections. There are those suggesting that this is the next debt bubble to burst, while others are questioning the severity of the problem. Regardless, this is an issue that is growing in significance simply because of the amount of debt in question. Within the past year student loan debt surpassed credit card debt as the largest source of unsecured debt in the USA. With the average student completing their academic program carrying $30,000 of debt, the total amount is hovering right around $1 trillion, and it didn’t happen overnight.
Most of the discussions recently have focused on how to alleviate this debt. Some are suggesting allowing student loans to be included in the debt relief act, which would allow loans to be absolved through filing bankruptcy (most student loans currently are not absolved through filing bankruptcy). Others are recommending further government subsidizing, while others are proposing a myriad of other remedies. The problem is that each of these is merely addressing the symptom & none of these recommendations is actually getting to the cause of debt.
The Causes of Student Debt
Attention needs to be given to the actual cause of student loan debt. There are multiple causes for this sort of debt. Here are a few:
1. Students & Families
It is undeniable that students & families taking out loans is a primary cause for debt. Work needs to be done on actually educating people on the implications of graduating with debt (This will be addressed more fully in a later post).
2. The Cost of Higher Education
Academic institutions are being funded on the backs of student loans. More attention needs to be paid to the real cost of education, where the tuition dollars go and how things can be reformed in order to mitigate rising costs of higher education (more to come in a later post).
The average cost for tuition has increased 900% since 1978. Basically, once college became “affordable” for everyone following the Higher Education Act, the cost started to skyrocket.
There is no doubt that the symptoms of the problem are real. But, in order to rectify the situation, time and energy need to be devoted to identifying and delivering a solution that will eliminate the cause of the problem.
So, as we get this series rolling, can you identify any other potential causes for the student debt problem?
Also, if you have a few more minutes to spare, please take this brief survey and we’ll share the collected answers later in the series. Click here to take survey