Game of Loans: It's All About Excessive Student Debt
by Roman Mashchak
How ironic the words of Benjamin Franklin may sound now, “An investment in education gives the best returns.” You probably won't agree with him when watching the ballooning student debt growth. Nowadays, American student loan debt is sitting at an incredible $1.4 trillion.
According to policy analyst Thomas Mortenson, when adjusted for inflation, tuition and fees at state universities and colleges have increased 230% since 1980. Even community colleges, which are supposed be more affordable, have increased 164 percent over the last 30 years. The number of people having loans, increased to 92%. While it was 22.5 million people in 2004, it has grown to 44 million people today. Not only has the number of borrowers increased, but the average borrowing per person has steadily risen from $15,300 in 2004 to $37,000 today. In academic year 2016–2017, out of the 22.5 million Americans who attended college/university, about 70% of students, took out, or had existing loans.
Here are the reasons behind this situation:
- College costs grow faster than inflation.
- States continue to cut funding of public colleges, making them increase costs.
- Colleges are competing with each other to attract more alumni and donors. They spend more money for new stadiums and luxury dorms.
- Students don't always understand how student loans work and miss the opportunity to take advantage of federal loans they're offered, instead they take it from public lenders, which is usually more expensive.
- The next point is about the more general situation in the USA. Middle-class workers' wages have stagnated over the last 30 years.
Living in these conditions, many students are simply unable to afford college, and at some point and they end up dropping out.
Previously we laid out a set of reasons as to why it’s so hard to graduate on time. A big reason is student debt. Usually it appears when the learning process isn't planned out properly and students have to study longer than 4 years. Each semester adds to the sum of a loan. Most of the factors affecting the extension of studying are about planning. Students cannot choose the right subject, because they don't know the required prerequisites. It may be too late when they finally do. Also the proper courses may be unavailable. So a student will have to wait one more term to gain the required credits.
As you can see, education planning directly affects budget planning. Which means it should be taken just as seriously. The importance of planning has been realized nowadays and a lot of colleges are using degree mapping or academic advising to help a student cope with this. However it’s still not the best option, as it's not available 24/7 and will require some efforts from the student. Not to mention that the bulk of colleges still don't offer these options.
Living in an era of technology allows students to get academic advising and degree mapping quicker and easier.
Prepler is academic counseling, powered by AI. It takes all the courses, analyzes what’s required for the student's degree, calculates the amount of credits, and proposes the best options and alternatives. Prepler works as a tailored solution for effective studying. Which positively affects effective budget planning.