Introduction
Student loan debt presents a major social issue at the moment as an unprecedented amount of people experience financial burdens due to it. Students across the country are forced to take loans to cover rising tuition fees in the hope of getting better career prospects in the future. However, the situation has been aggravated by the pandemic, when many people lost their income and were unable to repay their debts. Millions of students and graduates cut their daily expenses to cover their enormous student loan debt. The situation may have long-lasting negative consequences both for individuals and the state.
Student Loan Debt Crisis
Student loan debts are a major social issue in the US. A recent article published in Forbes reports that there is currently $1.75 trillion in student loan debt in the US, which accounts for both federal and private loans (Hahn & Tarver, 2023). Almost half of all students now leave the educational institution with debt (Hahn & Tarver, 2023). The situation has been negatively impacted by the pandemic as many of the borrowers experienced economic issues and could not pay their student loan debts steadily.
The Guardian reports that it impacted “a whopping 40 million borrowers, who for the past three years have had their payments paused because of the Covid-19 pandemic” (Sasani, 2023). Millions of borrowers across the US struggle to provide for basic necessities as they need to return their student loans. Biden’s administration announced several measures in August 2023 to relieve the burden on borrowers (Sasani, 2023). However, the decisions regarding the problem could have been met with enthusiasm on the part of the public, which increased the tension.
Positive Sides of Student Loans
Even though student loans led to increasing social struggles, they provided opportunities for both employees and the government. Students are encouraged to borrow money for higher education as it is generally a prerequisite for higher-paying jobs. It is reported that employees with bachelor’s degrees earn approximately 1.8 times more than employees with high school diplomas (Council on Foreign Relations, 2023).
Additionally, people with doctorates and professional degrees earn about two times more than people without higher education (Council on Foreign Relations, 2023). More people with higher education also boost the economy of the country, which encourages the government to invest in it. Highly educated employees provide “greater tax revenues, are generally more productive and civically engaged, and are less reliant on social programs” (Council on Foreign Relations, 2023). People with postgraduate degrees are engaged in innovations and technological advancements that can also provide economic advantages to the country. Therefore, with rising costs of tuition for educational programs of various levels, students still get a chance to acquire higher education for better economic prospects in the future.
Negative Sides of Student Loans
At the same time, student loans have negative effects on both individuals and the state. First of all, debts are now impacting young people more than in previous generations, as the cost of education has risen significantly (Hess, 2021). This causes more students to take out loans in bigger volumes than in the past. Overall, such a financial burden leads to less money for young people to invest, which will impact GDP in the future.
Additionally, student debts limit the purchasing power of young people, which contributes to a 0.05% decrease in GDP per year (Hess, 2021). Finally, the crisis forces more people to “default on their student loans” (Hess, 2021). Debt delinquencies lead to the limited opportunity of borrowers to participate in the state’s economy as it is getting difficult to perform any financial actions. On a broader scale, it may lead to slower economic growth as fewer citizens contribute to the economy.
However, student loan debts have a more profound impact on an individual’s life. Paulsen (2023) reports that students with loans tend to choose careers based on financial benefits rather than other criteria, which impacts their whole lives. Arts major graduates, for example, may abandon the idea of pursuing a career in the field as it would be harder for them to pay the debt. Therefore, there may be a shortage of educated employees in professional areas that do not offer high wages after graduation. Additionally, it may negatively impact the well-being of an individual in the long term as they push themselves to work in a field that they are not interested in.
There are also several studies on the impact of student loan debt on the psychological state of students. Kim and Chatterjee (2021) underline that the presence of student loan debt has a negative association with worse mental and physical well-being. It is essential that the size of debt influences the degree of impact on a borrower’s health and well-being. Rodney and Mincey (2020) report that debt repayment brings significant stress and anxiety to female Black college students. Thinking about the expenses related to covering the debt and continuing education results in poor mental and physical health outcomes. Therefore, the social issue can have a profound impact on the overall well-being of the population as more people are affected by the situation.
Personal Opinion
I am concerned with the situation, as the burden of student loan debt represents a significant societal challenge. Learners nationwide must rely on borrowing money to get a degree that does not guarantee financial security in the future. On the contrary, people are experiencing enormous levels of stress due to their uncertainty about their ability to repay the debt after graduation. They need to cut their expenses into essential categories such as accommodation, nutrition, healthcare, and others to save money for repayment. It impacts people for decades after graduation, which can result in tremendous economic and social consequences in the future.
Nowadays, many young people, especially those from disadvantaged socio-economic backgrounds, are trapped in a constant debt cycle. Student loans provide them with opportunities to get an education but at a disproportionately high risk of unbearable financial burdens in the future. The situation may lead to higher rates of mental distress, inability to start a family due to economic reasons, and overall economic decline that will further widen disparities between socio-economic layers of society.
Conclusion
Student loan debts continue to rise along with the costs of tuition. While higher education provides students with better career prospects, they are often trapped in a cycle of financial burden, which impacts their lives for decades after graduation. People are forced to save money in order to be able to repay their debts, which leads to poor living conditions and deteriorating mental well-being. The situation may have a tremendous negative impact in the long term due to slower economic growth as a result of the rising financial burden that young people experience.
References
Council on Foreign Relations. (2023). Is rising student debt harming the US economy? Council on Foreign Relations. Web.
Hahn, A., & Tarver, J. (2023). 2023 student loan debt statistics: Average student loan debt. Forbes. Web.
Hess, A. J. (2021). 3 ways student debt impacts the economy. CNBC. Web.
Kim, J., & Chatterjee, S. (2021). Financial debt and mental health of young adults. Journal of Financial Counseling and Planning, 32(2), 187-201. Web.
Paulsen, R. J. (2023). Student loan debt and the career choices of college graduates with majors in the arts. Journal of Cultural Economics, 1-21. Web.
Rodney, A., & Mincey, K. (2020). Understanding the relationship between student loan debt and stress among female students at an HBCU. Journal of African American Studies, 24(2), 269-275. Web.
Sasani, A. (2023). ‘This decision is a slap in the face’: The real cost of the US student debt ruling. The Guardian. Web.