Subscribe to Fourth Estate Watch our YouTube Channel Follow us on Twitter Follow us on Facebook

Student loans are getting out of hand

Erik Dorn, Opinion Writer
April 24, 2013
Filed under Opinion, Top Stories

Receiving a diploma in May will feel more like sitting at a slot machine hoping to get the jackpot than a ticket to a better life.

I should be excited graduation is nearing, shouldn’t I? It means I get to start life with a new job and finally feel like an adult. Yet, six months after I receive my diploma, the student loans will start coming due. Hopefully, I can get a job that provides the means to pay them down and still have grocery money afterward.

According to the Federal Reserve Bank of St. Louis, not only has delinquency on student loans surpassed those of credit cards, but the interest being paid on those loans has reached record levels.

The interest rates for many student loans are scheduled to double July 1 to 6.8 percent from 3.4 percent. Last year, Congress voted to extend the lower rate for a year, but this year, they will need to create a more long-term solution.

It’s gotten to the point in our society that if those entering the workforce don’t have a degree, they’re at a great disadvantage to those with one when applying for a job. High school graduates have little choice but to go spend thousands of dollars on a college education that will supposedly give them a leg up. But it will also put them in so much debt they may need to sell that leg in order to pay those loans back.

According to a report from the Congressional Budget Office, the federal government makes 36 cents in profit on every student-loan dollar it puts out and estimates that overall, student loans will profit the government $34 billion next year.

This is ridiculous. Federal loans are meant to subsidize the cost of college, not help the government profit from them. According to the Department of Education, in the first three months of 2013, borrowers defaulted on their loans in record numbers. A staggering 6.8 million federal student loan borrowers defaulted on $85 billion in debt.

The problem isn’t just the possibility of not being able to pay off the student loans when they come due, but even if I get a job where I can pay the student loans, it will be very difficult to afford a mortgage on a house. I most likely wouldn’t even be approved for a loan for a house because of my student debt.

My parents always said school loans are good debt because it’s an investment in my future. In a way, I agree. A degree qualifyiesme for a better paying job, but when the amount being paid on a student loan becomes so high it negates the extra an individual is making, is it really an investment?

Is the solution to cap the amount of interest that can be charged? Answers are hard to find, but something needs to be done or else the same thing that happened with the housing market will happen with student loans. The outrageousness of these loans not only affects the individuals receiving the bill, but it affects the economy as a whole.

So when I receive my diploma in the mail, I will be praying for the jackpot that allows me to pay back my student loans. I also want to look back and say what a great investment going to UW-Green Bay was to my life. If not, I hear the unemployment line is a happening place.