Student loans have been one of America’s biggest financial crises in young people. With a staggering $1 trillion in debt for 2019, the number has grown with the rise of college costs. For many, college is seen as a time to pursue self-growth and knowledge in order to find well paying jobs to survive. Exploring fields of study that appeal to a person is a dream come true for most. For students, borrowing loans from $30,000 to $100,000 has set them back in life milestones and continues to set them back as their loan interest grows. When apply for student loans, many do not have the financial education that is needed to sign these loans and have become pressured to pick payment plans that may not financially suit them in the future. This mistake in the system has set the debt levels high in the US. 

Students have been borrowing money from the government since 1958 in order to peruse higher education. It is no secret that college costs have skyrocketed a staggering 3-6% a year making college almost impossible for students to afford. Therefore, it is almost essential that students get these loans to continue their studies. According to Investopedia,“There are 45 million borrowers who collectively owe more than $1.5 trillion in student loan debt in the U.S. Student loan debt is now the second highest consumer debt category”(Friedman) 

OH NO!!!

For many, the amount of loan borrowing can range from $30,000 to $100,000 with a 4% interest rate that makes it almost impossible to pay off. Most student loan dilemmas are held by students who do not finish school. Meaning students have accumulated debt before graduating school. With this, students also struggle to pay off these loans with starting salaries that do not compensate for their loans on top of rising living expenses. According to The Impact of Student Loan Debt and Student Loan Delinquency on Total “The study also found 40 percent of graduates were unhappy with their starting wages and that 60 percent of students were paid by the hour instead of salary.” (Jones) With more than half of the population struggling with starting wages, the rise of unpaid loans with accumulating interest makes the student loan a lifetime payment. 

I hate my salary! What do I do?

Keep paying your student loans...

One of the biggest issues besides the lack of loan payment is the troubles with paying for the student loan. With the high costs of living, students have to rationally decided weather or not it's smart to use their income for food, or loans payments. This has lead to a crisis of many students being behind on their loan payments. According to Student Loan Debt: 2019 Statistics and Outlook, “Approximately 2 in 10 adults who took out student loans were behind on their payments.” (Kurt) As a result, many students end up wrecking their credit scores from an early age resulting in missed opportunities to buy houses and to take out future loans.

Do we get the food or pay the loans?

Feed Me

      To blame the student would be the wrong person to blame. Though one part of the equation is the parent responsibility to educate their kids financially, many parents are also struggling with their own student loan payments. One may also blame the school system for not discussing the financial situations in student loans as well.  "Scholars have found that 40% of low financial literacy among the young is associated with a range of poor financial choices." (Lusardi, Mitchell, & Curto, 2010). These poor financial choices enable students to give into the scams and unfair terms the government provides.

I don't know what this means?!

Financially Illiterate...

In hindsight, it is the responsibility for loan companies to guide the applicant of the loan. Students turn to these organizations in order to peruse their education but get a fast-paced careless service. Students also do not have the option to choose their loan provider, rather have it pick for them or the university marketing system. Victoria Bezezinski shares her experience in this loan trap experience stating, “Over 35% of students are using the companies because they are unaware of the government scheme, or are confused about it, because of the way private loan companies are marketed.” (Bezezinski)  Loan providers do not take into consideration the future income of students to adjust their loan payment to fit their needs. Something that should be stated prior.

I should use this loan provider!

No. Its a scam