You’ve probably heard of the dangers of excessive student loans in your life and the lives of many Americans; but what exactly does it mean for our country’s economic future? The Student loan fiasco and its mounting economic repercussions are huge pieces of the economic puzzle that need to be solved in order for our economic health and vitality to return.
Consider the following:
Our system operates under the requirement that a college education is mandatory for job security and career achievement. Statistics report that college graduates are more successful, make more money and have a happier life. The goal of attaining a college education has been made possible over the last 35 years with government backed student loans that can be repaid as soon as the student graduates, secures a good paying job and starts contributing back to the society that has supported him or her. However, with the declining job pool and the increasing work force saddled with expensive student loans, the system isn’t working the way it was intended. Many educators are concerned about the increasing financial squeeze on college students and their families as well as their repercussions on the nation’s economy. Rising student debt force students to drop out early before completing their degrees. This decline in the American scholar has become an Achilles’ heel in the competitive global economy. Skyrocketing debts may be pushing some graduates into areas of work that have a bigger immediate payoff instead of working in the area that would have benefited them or society more in the long run.
Tuition hikes are outpacing income growth by leaps and bounds. Over the past 20 years: private college tuition has inceased 179%; Out of state tuition has increased 226%; and in state tuition has increased 296%.
Increased Reliance on Student Loans
As tuition continues to rise, so does the reliance on student loans as a primary source of funding.
Defaults and Delinquencies Are Rising
As the debt among college students rises, so does the number of defaults and delinquencies.
Usually, it’s the default rate in particular that grabs headlines. But the less-serious delinquencies can also wreck a person’s credit. This study found that for every student who defaults (by missing several payments) there are at least two others who were delinquent but somehow avoided default.
The bottom line is that both delinquency and default, can do serious harm to a person’s credit score.
How Debt Can Derail a Mortgage Loan
Debt can hurt you in several ways when trying to obtain a mortgage loan. It doesn’t matter if the debt comes from student loans, credit cards or auto financing. As far as mortgage lenders are concerned, it’s all debt. And too much of it can tip the scales against you.
So what can be done to stop this runaway train? How can this one aspect of the American economy potentially derail our economy?
WILLIAM LLOP HAS A FEW IDEAS…..CONSIDER THE FOLLOWING:
STUDENT LOAN INTEREST
Our current tax code is awarding mediocrity.
Currently, student loan interest is deductible up to $2,500.00 per year for student/graduates that earn less than $80,000 per year.
We’re rewarding students for not earning a middle class income. The current tax code is rewarding mediocrity. Let’s level the playing field and simplify the tax code.
Make all student loan interest deductible up to $2,500.00 per year once the student graduates. For every year thereafter, increase the $2,500.00 by the inflation rate.
We now have a cottage industry of companies that finance students. They promise a student’s dreams will be fulfilled through college education, but they charge exorbitant interest rates and fees for those dreams. Often students owe interest on their loans as soon as they are approved or interest accrues until graduation, leaving the student with a massive debt to go with their new diploma. That may not be a concern for an engineering student or computer science major, but for lesser degrees, there may be few employment opportunities.
A lack of jobs does not prevent an individual from owing on their loans. There’s no debt forgiveness. Student debt load cannot be discharged in Bankruptcy. This guarantees that the lender will be repaid at various interest rates over the former students’ lifetime. Ouch.
WILLIAM LLOP HAS A FEW IDEAS......CONSIDERNTHE FOLLOWING
Lets limit the repayment of student debt to 10% of income earned.
Lets forgive the debt after 15 years of paymments.
Lets charge back the educational institution for the unpaid balance on the loan.
Lets take this excessive debt and exorbitant cost of tuition and hold the educational institution accountable for the couseling they gave the student/graduate.
When I went to college, there was a guaranteed student loan program. While I was in college, I did not get charged interest. When I completed college I began to get charged a very low rate of interest and I started my repayment plan. Everyone should have equal treatment. No interest is charged until you exit the higher education program.
Lets’ stop this cottage industry from feeding empty and false promises to our youth.
MORE SPECIFICS ON THE REPAYMENT PLAN
No Interest while in School.
When you finish college, or you stop going to college, interest begins to be charged.
The interest rate changes annually and is always PRIME.
You start your note payment 6 months after you finish school or you stop going to college.
You may opt to repay the debt over 15 years.
Economic changes demand adjustments to outdated economic policies. ; The Student Loan Issue is just one of the many areas that William Llop will revisit and revamp. COUNT ON IT!