America
is the land of opportunities. A country where everyone is suppose to
have an equal opportunity to be successful and live out their dreams.
Most dreams of financial success or stability require a college
education as a prerequisite to the desired career, but with the
rising cost of tuition, college is remaining a dream rather than
becoming a reality.
The
Weight of Student Loans
The
weight of owing student loans is comparable to taxes owed to the
government. There is virtually no way to escape repayment as it is a
non-dischargeable debt in Chapter 7 bankruptcy1
in most cases and federal student loan forgiveness is only offered
after 10 years if no payment has been late or missed. To qualify for
this you have to work in public service or be a teacher2.
If not, it is only offered after 25 years of repayment if no payment
has been late or missed.3
Relief such as deferment or forbearance are offered, but at the
expense of the student as with the latter interest is still being
compounded. This is not to include private student loans whose
collection practices are questionable and different than federal
student loans. Unlike regular debts, if you default on a student
loan, your social security and retirement can be offset by the
government. With the knowledge of how burdensome student loans are,
the skateboarder in my lego land protest has given up his dream of
college and has decided to try to make money by pursuing
skateboarding professionally as he had no other skills. The other
person is a foreigner who still has the dream of coming to America to
build a life that requires a college education. There is a contrast
between the American and the foreigner and their dream because the
American student is aware of the reality.
Student
Loan Bailout?
In
2008, President Bush signed the Emergency Economic Stabilization Act
of 2008 giving $700 billion dollars of tax payer money to corrupt
banks. According to the New York Federal Reserve, in 2011 there was
$870 billion in outstanding student loan debt in America. As easily
as the government decided to bailout our banks, the government could
devise a plan to bailout our students. The below graphs show that
the biggest blow is to the young adults and the adults who are still
young trying to build families and a future. They are the age group
who owes the most student loan debt as well as the ones with the most
that are in default.
Over
the years there has been little to no relief to student loan
borrowers. In 2010 President Obama made some progress by signing
The Health Care and Education Reconciliation Act of 2010 lowering
income based payment assignments from 15% to 10% of income and
lowering the forgiveness of debt from 25 to 20 years for those not
working in public service or as teachers as long as no payment has
been late or missed. Unfortunately, this does not take effect until
2014. It also starting dispersing loans themselves instead of having
private banks disperse the loans. 4
As
valuable as we know education is for the future of America, the
burden to families that are already struggling may be too great to
take a risk on debt that will follow them for life. Student loans
shouldn't feel like an incurable disease, but should be assistance
towards building a better future. Unfortunately that is not what it
has become and young adults have to look to other avenues to build a
future for themselves.
1“Discharge in Bankruptcy,” U.S. Bankruptcy Court, accessed October 13, 2013, http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/DischargeInBankruptcy.aspx
2“Forgiveness, Cancellation and Discharge,” U.S. Department of Education, accessed October 13, 2013, http://studentaid.ed.gov/repay-loans/forgiveness-cancellation
3 “Student Loan Bankruptcy Exception,” FinAid, accessed October 13, 2013, http://www.finaid.org/questions/bankruptcyexception.phtml
4“Big Changes Coming to Student Loans,” U.S. News & World Report, accessed October 13, 2013 http://www.usnews.com/education/articles/2010/03/24/big-changes-coming-to-student-loans
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