The Wall Street Journal writes that the total debt owed on student-loans in America is greater than the total credit card debt of the nation. Financing the American dream of higher education has become big business, yet it is the United States government that stands behind this business, formerly subsidizing companies like Sallie Mae and taking over all student-loans in 2010.
The 2011 Occupy Wall Street protest movement has brought a focus to the debt burden of young Americans who have gone into student-loan debt yet have a hard time paying off those student-loans in a down economy.
Why is this statistic so alarming?
You might say that borrowing money is the American way. Buy now and pay later. When the issue is whether or not to buy a new television or a new cell phone, we can simply chalk up any resulting debt to choice. It is the consumer’s choice. If she really wants that phone and she goes into debt for it, adding to what she might already owe to the credit card company, well, that is up to her.
Education does not fit into the same category of choice.
These days the cost of attending college is high as is the cost of choosing not to attend college. People with bachelor’s degrees are more likely to have steady, full time employment and more likely to have health care plans. They are less likely to be laid off. In 2009, the wage gap between those with a bachelor’s degree and those without was $15,000.
Clearly there are practical, financial advantages to attending and graduating from college. However, there is an obvious correlation between student loan debt and time spent in college.
Students don’t have to graduate from college to end up with large student-loans, but graduating without high levels of student-loans seems to be increasingly difficult.
With rising competition for jobs and new types of college programs (online, low residency, etc.), post-graduate degrees are becoming more popular. These programs, for the most part, add to the student’s debt load.
There is a trade off then. If you want to get a good job, acquire job security, and health care while pursuing your dreams of affluence in America , you’ve got to be prepared to go into debt.
Is Congress doing anything about student-loan debt?
The short answer is yes, kind of, but mostly no. The United States Congress has debated a bill to forgive student-loans, but action is not being taken there.
President Obama has announced plans for reform to mitigate the hardships of student-loan debt, expanding the current income-based repayment plan as a measure for relief.
In a non-partisan situation, like so many non-partisan situations since 2008, there is sure to be partisan fighting on Capitol Hill.
The debate will indirectly determine the cost of pursuing the American dream, another non-partisan issue…
Inside Higher Education
Wall Street Journal
National center for Education Statistics