In the previous two parts of the continued discussion on the student debt crisis, the main focus of the conversation primarily circled around why college tuition is so expensive, why it’s increasing at such a large rate, and what higher education institutions can do to limit these massive increases in tuition rates. As a result, it is important that the third and final part of this discussion is focused on how exactly these rising tuition rates are impacting students today, as well as how these expenses will continue to impact them throughout their lives. At the end of the day, the discussion surrounding the student debt crisis should always be had with the students’ best interest in mind. After all, it’s crucial to understand how exactly $1.61 trillion in student debt affects the 43.4 million Americans who hold this debt.

Firstly, who exactly is taking out student loans, and how much do they contribute to the $1.61 trillion figure? According to Brookings, “one-third of the outstanding debt is held by the 6 percent of borrowers who owe more than $100,000.” While this small number of students comprises a large-by-comparison 33% of the national debt, these graduates are often able to pay their hefty student loans with high paying jobs (as a result of their graduate or professional degrees). Using this same logic, it is clear to see why borrowers with less total student debt struggle more to pay off their student loans. In terms of what types of institutions these students are attending, it is unsurprising that students who attend private for-profit institutions have significantly-higher student debt than students who attend public universities.

Beyond the relatively well-known lifelong burden that college graduates hold as a result of their student loans, there is a plethora of far-reaching consequences which, in many ways, set these students’ lives back, making it harder for them to reach potential goals like purchasing a home or starting a family. According to a study performed by ProgressNow, college graduates with student loans are 36% less likely to buy a house and significantly less-likely to take out car loans. In addition, on average, students with outstanding loans have lower credit scores, making it even more difficult for these students to borrow in general. These notably lower credit scores come partially as a result of graduates being unable to pay their student debt in time. In fact, according to ProgressNow, despite the rate of credit card defaults falling below 10 percent, “the rate of student loans in ‘serious delinquency’ has gone up to 11.5 percent.” This means that the rate of students who have payments over 90 days over due has increased by over 10 percent. Worst of all, according to Rohit Chopra of the Consumer Financial Protection Bureau, many students who find themselves unable to pay off their student debt don’t end up graduating; in fact these students’ default rate is three times higher than students who do graduate. Students who don’t get the opportunity to finish their degree are left with significant debt and lowered credit scores, all without being able to reap the benefits of a higher education degree. While the benefits of pursuing higher education are well-established, it is often easy to miss the stories of students who find themselves unable to take advantage of these benefits due to the unnecessarily-high cost of higher education.

To continue on the implications of lowered credit scores as a result of outstanding student loans, it is important to consider the impact of student debt on one of the most important aspects of a college graduate’s life after school––finding employment. Another point which is rarely touched upon in the conversation surrounding student debt, finding employment is crucial for graduates in terms of paying off student loans on time. According to ProgressNow, “Despite their qualifications, grads often have to settle for lower-paying, lower-skill jobs just so they can start paying their loan bills right away. As a result, graduates in debt often miss out on the benefits that come with a degree.” Similar to the students who never got to graduate as a result of absurd college tuition rates, graduates in lower-skill positions can’t take full advantage of their degrees, yet they must still pay off the loans they took out for the degree. Even worse, students with lower credit scores as a result of student debt may have even more difficulty finding employment. In fact, according to Investopedia, “Companies frequently conduct background checks, which can include credit checks—especially if you’re applying for a position in the financial industry.” Unfortunately, companies that find students with lower credit scores may be hesitant to hire these graduates as a result. While these adverse consequences of taking on high amounts of student debt aren’t necessarily justified or logical, they continue to plague students with debt.

With the previously-discussed impacts of students taking on high amounts of debt clearly affecting graduates’ lives not only immediately after school, but in the long term as well, it only seems obvious that something must be done. In particular, it is crucial to minimize the financial barriers of entry to higher education for students from all backgrounds. For example, while many schools offer financial aid to students, many students who come from middle-class families find themselves in the dilemma of not being eligible for need-based aid, yet not having enough money to cover the cost for college. In fact, according to a study from Dartmouth sociology professor Jason Houle, “students from families earning between $40,000 to $59,000 per year racked up 60 percent more debt than lower-income students and 280 percent more than their peers whose families earned between $100,000 and $149,000 per year.” Drawing upon the conclusions of parts I and II from the discussion on the student debt crisis, it is essential that colleges control egregious and unnecessary spending on excessive campus projects and programs, as well as for measures to be taken to increase these schools’ accountability in terms of budgeting and finances. After all, the best way to minimize the impacts that student debt has on college graduates is to minimize student debt, and the best way to minimize student debt is to control and monitor tuition rates and increases.

Sources:

https://www.investopedia.com/articles/personal-finance/100515/10-ways-student-debt-can-destroy-your-life.asp

“https://scholarshipamerica.org/blog/the-far-reaching-impact-of-the-student-debt-crisis”

https://www.cfr.org/backgrounder/rising-student-debt-harming-us-economy