Student loan debt is an issue that affects the lives of students creating a major impact on their financial independence and the standard of living. The purpose of student loan is to offer financial assistance to students facing financial challenges. Upon accruing the loans, the students are required to start repaying the debts after completing their education in the universities and colleges. Lack of employment for graduate students results in a significant increase in the number of loans defaulted by students. The increasing student loan debt creates the need to addressing the issue considering the negative impact on the lives of students and the overall education system. Addressing the issue of student’ loan debt requires implementation of effective solutions, which include forgiving all student’ loans, revising repayment options, and establishing measures that would allow student loan refinancing.
Forgive All Student Loans
The first solution that would help in dealing with the increasing issue of student loan debts involves forgiving all the students’ loans. According to Ulbrich & Kirk (2017), forgiving student loans would provide meaningful relief to the students considering that the loans will be written off. When focusing on the issue of students’ loans, it is important to note that the primary factor that results in an increase in the number of loans defaulted is the issue of unemployment among the graduates. Although the students work hard to obtain their educational goals and objectives, lack of employment opportunities in the society makes it difficult for a graduate to earn a living. In that case, it is important for the federal government to ensure that all students loans are forgiven considering that majority of the university graduates do not have a source of income that may facilitate loan repayment (Irby, 2019).
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Dealing with the issue of increasing student loan by providing forgiveness of the loans is a complex yet very efficient solution for the increasing number of students’ loans defaulted. When considering the solution of forgiving the debts, it is important to note the primary factor that led to the need to acquire the loan. Lack of adequate financial resources is the leading factor that contribute to the need for taking up student loan. It is important to note that the student loans only meet the financial needs that involves cost of education but do not necessarily impact on the life of the student. Thus, this create the need to forgive student loans considering the financial challenges that a student may be facing. Nica & Mirică (2017) maintain that writing off the loans is a significant solution to deal with the $1.5 trillion federal student loan debt. The solution is viable as it helps to ensure that students do not continue to accrue the debt, which is a factor that may affect their future credit scores.
Reform Repayment Options to Tackle Excessive Interest Growth
The second viable solution that is effective when dealing with the issue of increasing students’ loan debts and rates of defaulting involves reviewing on the repayments options. Considering that the purpose of the students’ loans involves providing positive benefits for the students by ensuring that they can achieve their objectives, it is important to capitalize on measures that may help to reduce negative effects of the accrued debts. Excessive interest growth is a vital aspect that results in increased defaults rates considering the students are overwhelmed by the debts (Nissen, 2019). Loans with accruing interests tend to become a burden to the debtors and results in delayed payments or even defaulting. Dealing with the issue of debt from the repayment options point of view is a significant measure that may help on ensuring that students get relief from the loan debt burden.
The ability to capitalize on revising the interest rates and the repayment may benefit the students and ultimately enhance the economy. The increasing students’ loan debts have major impact on both the students and the economy. The impact on students involves psychological effects that are associated with stress, accrued debts and a bad credit score (Nissen, 2019). On the other hand, the student loan debt impacts on the economy considering that the loans are required to be paid in a bid to enhance sustainability. Additionally, the accumulation of debt affects the ability of the government to provide financial assistance to future students considering that the repayment rates are too low thus exhausting the financial budget.
Another significant aspect that indicates the need to revise on the repayment options is to provide encouragement to students to undertake different programs and borrow the students’ loan for financial sustainability. Effective repayment options should ensure that the students pay their debt without much interest. The flexibility in repayment options will focus on ensuring that the graduates are not pressured to start repaying the loans immediately they graduate (Nica & Mirică, 2017). Additionally, reforming on the repayment options is necessary to ensure that the amount owed by the students does not affect their credit scores in the future. The solution is effective in addressing the issue of increased debts as it purposes to promote financial independence and reduce debt burden through flexible repayment options and reduced interest rates. Although the solution does not guarantee full repayment of the loans, it may help to encourage future students to take up students’ loans in pursuit of their educational goals.
Allowing Student Loan Refinancing
Student loan refinancing may also be considered as a key solution to the problem associated with high student loans. Refinancing offers an alternative where student borrowers are likely to get a lower interest rate during the entire duration that they are paying their student loans (Delisle, 2017). The basic expectation is that this solution will pair students intending to take up loans to cater for their education with a lower interest rate that covers a longer repayment period. The expectation is that this will ease on the burden that the students experience after they have completed their education, which ultimately affects their ability to repay the loans offered. Students find it easier to repay their loans considering that the amount of money that is expected to be paid. Ultimately, this will help reduce overall possibility of defaulting among students after they have completed their education.
The refinancing option may also be considered for students that are currently repaying their student loans. The option helps to offer an alternative to reduce the amount that they are paying while increasing the time period of payment. The expected financial benefits are significant considering that most of the students are much more likely to take up this option as a way of enhancing their capacity to deal with the issue of student loans (Ulbrich & Kirk, 2017). The challenge that majority of those paying their students loan today are facing is that it becomes hard for them to pay their loans while covering their expenses. That highlights the importance of shifting towards a refinancing option that would help students cater for their expenses at the same time pay for their student loans.
The solution is of great value as it enhances the overall capacity for the students to consider student loans, which is a factor that is attributed to their ability to pay for the same. For example, if the current interest rate for a PLUS loan is 6.31%, refinancing options will offer a rate of 5%, which would mean that a student may save up to $3,245 on a 10-year amortization schedule (Nissen, 2019).That arises as a direct consequence of the fact that student loans will become much more affordable; thus, limiting the impacts that students are likely to experience during their repayment. Therefore, this serves as a clear indication of the fact that indeed refinancing is a key solution that students with loans may consider As part of advancing their overall capacity to deal with high interest rates. On the other hand, the federal student loan debt is much more likely to reduce significantly considering that students will be encouraged to repay the loans offered.
Opposition
Each of the solutions discussed above provides valid inference on how the federal government would deal with the issue of student loans debt, which has become a major issue of concern. However, the solutions fail to consider the fact that the demand for loans is much more likely to increase depending on the solution that has been put in place. For example, providing students with loans at a lower interest rate is much more likely to create a situation where demand for these loans may go higher than anticipated. Ultimately, this would mean that instead of the federal student loan debt reducing, it is much more likely to increase moving into the future. The solutions fail to consider the counter effect that may result based on their introduction as part of establishing a framework through which to deal with the high volume of students with need for loans.
Another key aspect to consider as part of the opposition for the solutions given is that the solutions fail to consider some of the factors that are pushing students towards taking up student loans. The solutions only deal with the aftermath of the issue, which is that the federal student loan debt has increased significantly attributed to the high number of students failing to repay their loans. However, they do not address the fact that students face a wide array of issues such as poverty, which force them towards taking student loans as a way of financing their education. For the solutions to be as effective as may be expected, they need to engage in an in-depth evaluation of some of the key contributors to the high demand for student loans. That would mean that many more students will be self-sufficient in financing their education; thus, improving on their capacity to counter the possibility of taking student loans (Irby, 2019).
Conclusion
Student loans remain one of the key issues affecting a significant number of students and former students today, as the number of those unable to pay their student loans is on the rise. The challenge in repaying student loans has been driven by the fact that many of the students lack overall capacity to pay their loans considering that they do not find expected employment opportunities. From this perspective, some of the key solutions provided in dealing with the issue of student loans include forgiving all student loans, reforming repayment options that students consider as a way of tackling excessive interest growth, and allowing student loan refinancing. An opposition to these solutions is that they only seek to consider the issue based on its current impacts but fail to provide long-term solutions. Students’ loans affect a significant number of students in the United States, as it becomes hard for them to repay these loans after completion of their education, which increases the federal student loan debt significantly thereby highlighting the importance of shifting attention towards solutions given.
References
Delisle, J. (2017). Opposing perspectives on student debt: is the college loan crisis reality or myth? Education Next , 17 (2), 91-93.
Irby, L. (2019). Breakdown of Student Loan Debt in the U.S. Retrieved from https://www.thebalance.com/student-loan-debt-statistics-4173224
Nica, E., & Mirică, C. O. (2017). Are Increasing Student Loan Debt Levels Burdening Graduates? Journal of Self-Governance and Management Economics , 5 (2), 68-77.
Nissen, S. (2019). Rethinking debt for students as citizens. In student debt and political participation (pp. 81-93). Palgrave Pivot, Cham.
Ulbrich, T. R., & Kirk, L. M. (2017). It’s time to broaden the conversation about the student debt crisis beyond rising tuition costs. American journal of pharmaceutical education , 81 (6), 1-18.
