Quality education is one of the major factors that guarantee future economic prosperity of various countries. Education improves the knowledge of people in the society. Higher education is one of the most important educational levels.
Heavy investments in education after the Second World War is one of the major factors that has made the U.S. be prosperous. Heavy investments in education and scientific research led to the economic boom of the U.S. in the second half of the twentieth century (Greenberg and Page 48).
However, there has been significant reduction of state funding on higher education over the past decade. This has led to skyrocketing of the higher education.
This has led to the creation of another problem. There has been a meteoric rise in student debt. Student debt poses a real threat to the current and future generations.
The number of Americans who receive college education has increased significantly in the past three decades. It has increased by more than 1000%.
Approximately 70% of students graduate with loans of more than $24,000. 10% of these students have loans of more than $54,000 (Johnson, Ostern and White 1).
African American and Latino students are the major groups that have huge student loans. The high debt burden of these students is because African Americans and Latinos families are less wealthy than white families.
Parents of white students can afford to provide financial support to their children. This forces African American and Latino students to rely heavily on student loans for their college education.
The debt burden of American students is more than $1 trillion (Johnson, Ostern and White 1). The global financial crisis is one of the major factors that have led to the rapid increase in student loans.
During the global financial crisis, there was a significant increase in the enrolment of students in different colleges. This led to a significant increase in the number of students who borrow money to finance their education.
Reduced state funding for higher education is also one of the major factors that has led to a significant increase in student loans. State funding helps in making the cost of college tuition affordable (Sreenivasan 278).
Therefore, reduced state funding necessitated colleges to increase the cost of tuition. The increase in the cost of college tuition necessitated students to borrow money to finance their education.
The high cost of college tuition made it difficult for families to rely on savings, grants, or scholarships to finance the education of their children.
Since education is one of the major factors that led to economic prosperity of the U.S., reducing state funding on education may reduce the competitiveness of the U.S. in the global market (Greenberg and Page 48).
The global financial crisis had a direct effect on the increase in student loans. It reduced the value of endowment funds of colleges. This reduced the amount of scholarships and grants that colleges offered students.
In addition, the global financial crisis reduced the amount of money that the federal government offered institutions of higher education (Johnson, Ostern and White 1). These factors necessitated students to borrow more money to finance their education.
A significant increase in the number of for-profit colleges has also contributed to the significant increase in student loans. For-profit colleges collaborate with private lenders. They market the loans directly to students.
This practice makes students obtain loans without knowing all their options (Johnson, Ostern and White 2). This has made students incur unmanageable loans.
After graduating, students have to repay the loans. Repaying the loans is very challenging. Repaying the loans may burden the students and their families for decades. This poses a threat to the current and future generations.
These loans limit the ability of the students to build successful careers. In addition, it increases the financial burden of their families.
In some instances, the huge student loans may force students to take low paying jobs. The students may be unable to wait for high paying jobs. Taking the low paying jobs, which are readily available, enables the students to stop the payments and interests from increasing significantly.
This practice reduces the number of graduates who are willing to start businesses. This has a negative effect on the U.S. economy.
The income of graduates who have federal loans determines their monthly repayments. However, this option is not available to graduates who have private loans (Maeda 261).
A significant increase in the cost of college tuition has increased the financial burden of students and their families. In some instances, students turn down admissions in colleges that they desire since they are unable to raise fees for the colleges.
In addition, inability to raise college fees may force students to delay or fail to attend college. Thousands of students leave college without a degree annually (Johnson, Ostern and White 2). This is despite the fact that they may have huge student loans.
Despite the fact that higher education has many problems, it is a fact that higher education is vital. People who have a college degree are more likely to find employment that people who have only a high school diploma. College education is usually a pathway to future financial prosperity.
In addition, college education provides students with skills that are vital in the development of the American economy.
References
Greenberg, Edward and Benjamin Page. The struggle for democracy. 11th ed. 2013. Upper Saddle River, NY: Longman. Print.
Johnson, Anne, Tobin Van Ostern and Abraham White. The student debt crisis, Washington, DC: Center for American Progress, 2012. Print.
Maeda, Martha. How to wipe out your student loans and be debt free fast: Everything you need to know explained simply, Ocala, FL: Atlantic Publishing Company, 2009. Print.
Sreenivasan, Jyotsna. Poverty and the government in America, 2-volume set: A historical encyclopedia, Santa Barbara, CA: ABC-CLIO, 2009. Print.