As tuition rates increase and job outlook continues to look grim, college students face more monetary difficulties today than ever before. Being thrown into a vicious cycle of debt, most college students today face a conundrum of attending a school they can’t pay for and putting themselves into debt, or not attending college and facing the possibility of having a job that does not provide enough of a salary to live a comfortable lifestyle.
A series of articles in this week’s editions of The State News has chronicled the effects of debt on students and how the federal and state-level cuts to education have a detrimental effect on financial aid from universities. The decline of Michigan’s economic health during the recession equated to cuts in higher education funding, decreasing universities’ money available for financial aid while student needs increased.
As student loans pile onto college graduates’ shoulders at a higher level than ever before, there is potential for disastrous long-term effects on our economy, as many graduates will be so far in debt before they earn their first cent from a career-paying job.
It’s unfortunate students are graduating from college into a different world than their parents, with less jobs available for graduates and college costs higher than they have ever been. The funds parents have been saving for their kids for college are, in most cases, not enough to last all four years, causing more students to take out loans.
Many students have taken a different route for higher education, spending the first two years at a community college and then transferring to a university to lower their costs for four years of education. The cost of tuition combined with housing is too high for many students after graduating high school, so they choose to live at home and get a local job to help pay for school.
Some students might also face the dilemma of switching their major to hopefully land more high-paying careers because they feel they may not make enough money to pay off loans and live a comfortable lifestyle in a job they would enjoy. Students should not have to sacrifice their interests in order to make enough money to pay off loan debt.
Washington’s political climate also is playing a key role in the interest rate paid on student loans. Congress passed the College Cost Reduction and Access Act in 2007 to lower interest rates on federal subsidized Stafford student loans. The current interest rate on these loans is 3.4 percent, but the bill is set to expire by the end of this month.
Both Democrats and Republicans in Congress agree the interest rate should continue to stay at 3.4 percent, but cannot agree on the means to do that. House Republicans desire cuts to federal workers’ retirement benefits and Obama’s health care reform act while Democrats disagree, proposing eliminating tax cuts for high-income households. If Congress cannot compromise by the end of this month, the interest rate on Stafford loans will jump to 6.8 percent starting July 1. Congress must come to an agreement on how to keep these interest rates low or else they will push many more college students further into debt.
Today’s college graduates face more challenges than any generation before them. As many more students are graduating in debt to student loans only to find a depressing job market with little to offer them, the long-term effects on our economy could be disastrous.
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