Research Paper on Student Loan Debt: A Growing Crisis

Introduction

Student loan debt in the United States is said to be accelerating at a very high rate. It has become a burden for the country because, for the last eight years, the debt has doubled. The loan amount may be owed to the school or the bank, maybe if the student drops out of the school. The loan can be considered a default if a given time passes and no responses to the request by the school or from the lender. As discussed in this paper, there are many factors accountable for student debts, one of the first being a decline in income for the graduate in comparison to non-graduates (Fry, 2012). There has been a significant decrease in historic lows, especially for the people who were born in 1980 and had post-graduate degrees. This research paper reviews the literature for student loan debt in the United States, and analysis data gives finding and suggestions to deal with the debt crisis.

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There are two significant types of student loans in the United States; private and the federal. The federal dominates the action of the amount of money available and the loan repayment. According to the date of students enrolled in different Universities and colleges in 2019, 20 million of them received federal loans from Ford Federal Direct Loan Program. Every student received about $9, 300 bring several $93 billion for all the investments of the students (Fry, 2012). On the other hand, private loans are available from banks or other credit unions. However, all the students are advised to exhaust federal aid loans first. The private investment may be accompanied by a lot of terms and conditions, and excellent credit is needed.

Additionally, the interest rates are also higher as compared to federal loans reason as to is that some terms involved in the private loans are not part of the national. Further, central student loans can be categorized into five types. These include direct consolidation loans, graduate PLUS loans, direct subsidized loans, direct unsubsidized loans, and Parent PLUS loans (Fry, 2012). The private student loan is also divided into private student loans and private parent loans.

Literature Review

Student loans include federal loans from the government that most of them come with low interests to the students. Private loans are other types that are given to individual funded students depending on their credit status and have high-interest rates. The loan system in America is controlled by The National Student Loan Data System, which is under the ministry of education in the US. The loan system controls the database that has the student information concerning education loans.

Moreover, guaranty agencies and other loan programs are linked to the systems where they can get the information they want from the database concerning the students' loans. The student loans are given to higher education students to further their academics (Barr, 2019). The students apply for the loans, and after successful scrutiny of the documents, they are given the funds to further their learning. The credits from the federal administration have low-interest rates and are elastic because students can defer the payment during their education period to concentrate on studies.

The federal government in America has been offering direct loans to students where no guarantors are required to apply for the loans. In turn, learning cost has raised due to the dependence of students on the loans leading to increased student credit, which has been a crisis for the government (Velez, 2019). Additionally, when the students turn down the repayment of the loans or pay at a slow rate, the debt increases for the government. Likewise, the systems give room for students to extend their repayment period, thus making many students adopt that plan in their repayment. Therefore, this leads to a rise in the number of loans for the government. Another effect of the student loan system is the struggle for a refund by the borrowers. Therefore, it is caused by the complexity of the repayment process used by the department in charge of giving loans (Bleemer, 2017). Unfortunately, the failure to repay the loans has adverse effects on the borrowers because they can be subject to defaulters and face collection fees and other penalties like denial of their social security funds.

Methodology

Research has shown that most of the students are using credit cards to finance their education. There exist some mixed methods of collecting and obtaining data for the student loan debt crisis in the United States. The data can be obtained from students' unit records, can be from original surveys, or can be derived from examining students' experiences with debts. This study focuses on reviewing students' prior skills with obligations. There are very many students within the country who receive these loans. As far as this is concerned, this will focus on ten groups across various cities of the United States. It implies that at least five universities and colleges shall be visited. Information will be obtained from at least three undergraduate students from all the five universities and colleges with consideration of diversity in race, age, class, and ethnic backgrounds shall be interviewed.

Data Collection and Analysis

The interest rate within the country is a significant factor that affects increasing debt numbers in the United States. Interviews were conducted, and prompts of the topic were addressed. Rapids of the groups selected facilitated conversation across various groups of diverse individuals. There was a consistent experience for learners, and the primary concern for the students was how they were going to pay for their educational expenses (Jackson & Reynolds, 2013). It was an interactive session of discussion, and coding theory was selective to define further debate among the research members. Most of the students with federal loans expected that they might get government attention in the future in terms of getting government jobs for them to pay the loans.

Findings

The study concentrated on experiences for learners and their experience with debts. Comments from various students majored on were; students' perceptions and the actual costs of attending university, their feeling about carrying the deficit in the future, and the effects on the mortgage in their lives (Jackson & Reynolds, 2013). The research found that there is a collective experience for all students across the campuses. The research was conducted.

Perception and the real cost of attending university or college intervened in the lives of many students. While giving the loan to students, the government does not consider unexpected expenses such as transportation, student forms not counted in the financial planning for college, and other considerations like proximity to the university or college (Houle, 2014). Some of the students live at home, so every morning they need money for transport to their colleges. Other families are unable to provide for the daily students' costs because the costs exceed what the families are feasible.

How do students feel about carrying debt? This is also connected to their perception of the loan and the experiences a particular student can have with his/her parent or older siblings. Considering the past few years' debts, some the students avoid the liability completely after they finish school while others consistently make efforts to reduce the loan debts (Houle, 2014). The research found that most of the students try to avoid the adverse effects of the loan from reaching their parents and siblings. The credit affects the lifestyle for students because of some shape their lifestyle with the experiences they have had in the past. Other students view the loan debt as an aspect of campus life, just like culture for university and college. Therefore some may make international efforts to minimize the amount of debt they have carried over years in college.

Suggestions

The government provides funds to students by giving them loans to support their education. However, the current system is not the best one to obtain training at high levels because it does not provide options on how the students can pay the money back after school. The loan system should provide strategies on how the students can repay their credits to reduce the increasing loan debt.

The existing loan system has failed to implement the changes made concerning the rules and payment of the loans from borrowers. The mechanism of payment should be monitored to ensure that the rules are followed and applied to every loan borrower as required (Negri, 2013). Moreover, the system has also failed because the policymakers do not allow policy reforms on the methods by expanding access to its data (La Mort, 2010). Students face different challenges as they navigate on the systems of paying their loans to the authority, thus showing that the policies are not the best ones when it comes to loan processing.

Conclusion

In proportion to the majority perspective of a massive amount of quantitative research since the mid-1990s, the law has had the prospective significance for financial development as well as for economic growth. Most of the students describe the loan as a burden in their lives, although they state that financial help. They weigh the debt amount with the expected income right after securing a job. Right from that point, it concerns me as a researcher to understand the debt and effects it has on plans for the students.

It is essential to review the systems and find out the loan crisis faced by students in America. It is a concern for everyone within the society. The overall students loan system in America is explained in the paper, along with the beneficiaries of the loan who are mainly students in higher education levels. The method of giving loans has led to increased loan debt because of its effectiveness in offering services. It is essential to understand the crisis caused by student debt in America, which is increasing every year. However, the liability has been created by the student loan system in the country. Understanding if the method is the only best option for funding education is also essential.

References

Barr, N., Chapman, B., Dearden, L., & Dynarski, S. (2019). The US college loans system: Lessons from Australia and England. Economics of Education Review, 71, 32-48.

Bleemer, Z., Brown, M., Lee, D., Stair, K., & Van der Klaauw, W. (2017). Echoes of rising tuition in students' borrowing, educational attainment, and homeownership in post-recession America.Fry, R. (2012). A record of one-in-five households now owe student loan debt. Pew Research Center, September 26.

Houle, J. N. (2014). Disparities in Debt: Parents' socioeconomic resources and young adult student loan debt. Sociology of Education, 87(1), 53-69.

Jackson, B. A., & Reynolds, J. R. (2013). The price of opportunity: Race, student loan debt, and college achievement. Sociological Inquiry, 83(3), 335-368.

La Mort, J. R. (2010). Generation debt and the American dream: The need for student loan reform. Harvard Law and Policy Review, 4.Retrieved from:https://heinonline.org/HOL/LandingPage?handle=hein.journals/flr82&div=56&id=&page=

Negri, K. (2013). Mortgaging the American Dream: The Misplaced Role of Accreditation in the Federal Student Loan System. Fordham L. Rev., 82, 1905.

Retrieved from: https://harvardlpr.com/online-articles/generation-debt-and-the-american-dream-the-need-for-student-loan-reform/

Velez, E., Cominole, M., & Bentz, A. (2019). Debt burden after college: the effect of student loan debt on graduates' employment, additional schooling, family formation, and homeownership. Education Economics, 27(2), 186-206.