Philip Piletic

Coordinator

Morgan, UT

Interests: 21st century learning,...

  • Posted 1 Month ago
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The High Cost of Rising Student Debt

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The looming student debt crisis in America has been the subject of near-constant debate for several years now. Student advocates claim that the costs of higher education are an unsustainable cash-grab by for-profit institutions while some financial analysts dismiss the high default rates as an intentional dodge of responsibility. Whichever side of the argument you are on, the facts on the ground aren't pretty. As educators, we can't afford to ignore it.

There's currently $1.34 trillion in outstanding student loans in the U.S., 11% of which were either delinquent or in default. That represents the second largest category of debt nationwide, after household mortgages, and it's continuing to rise. Student loans are one of the only types of debt that are not dischargeable through bankruptcy in most cases, and statistics show that it can end up to be a lifelong burden; with some seniors even facing garnishment of their social security payments.

An Ominous Sign

If the raw numbers weren't disturbing enough, consider how financial firms are beginning to describe the issue. Citigroup released a report that drew parallels between the current student debt situation and the conditions that led to the last housing market collapse (and we all know how that turned out). This characterization alone should set off alarm bells nationwide, since Citi itself has either been the cause of or has been in the middle of every major financial calamity of the last hundred years.

The Federal Response

For a while, it looked like the federal government was about to step in to find a solution to the crisis-in-waiting. They introduced new options for debt forgiveness and repayment of federally-backed student loans, and offered advice on how to consolidate student loans to make them easier to pay down. After much discussion of the topic during the 2016 presidential campaign though, there's been no sign of any concrete solutions in the offing. Meanwhile, a potential time bomb continues to tick in the midst of our economy.

The Systemic Risk

Aside from the sheer financial and economic fallout that would result from a collapse in the student loan market, there's another troubling potential effect. The educational system itself could be very much at risk. As state and local governments have reduced funding to public colleges and universities, they've been disrupting the ability of those institutions to function as intended. The cuts have also exacerbated the financial burden placed on all students.

Those training to be educators are particularly at risk. They are required to pay for the requisite degrees, and then end up in an underpaid position; this virtually guarantees that as time goes on, students will simply abandon the profession as a viable career. If this is allowed to occur, we will come face to face with the ultimate paradox of the student debt crisis. When the cost of education becomes completely prohibitive, there will no longer be teachers left to provide it to the next generation.

The Cost of Failure

It is manifestly obvious that the costs of failing to address the student debt crisis could create lasting, if not permanent, damage to our nation as a whole. No matter how you choose to look at the problem, and regardless of who you believe is liable for it, we are all facing the risk of fallout. The grievous damage our educational system could suffer might cripple the nation's economy for generations to come. Educational quality is the bedrock of the new global economy, and if we wish to have any hope of remaining the economic envy of the world, we had better start looking for a solution to student debt.

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