Facts and Fiction of Student Debt

Student debts reaching a massive number over the past few years have prompted immediate attention among students, educationists, and financial institutions. The rise in the number has brought to light the subject of the number of students applying for loans to finance their higher-educational pursuits. For the first time in the history of debts, student loan debt has increased over credit card debts. With such situations cropping up, people have also been introduced to several misconceptions that fail to be helpful or productive.

Here is a quick look at the facts and fiction related to debts on a student loan –

College Education is not Worthy of Money Anymore

After completing graduation, students are often warned about the threatening situation in the professional world. While the situation might come up to be true in some cases, it is not the ultimate fact. It cannot be stated that a degree earned from college is not worth any value in terms of professional benefits and the money spent. The current job market is certainly challenging, but the situation tends to get worse for dropouts. Unlike, the graduates they, do not even have the support of a credible degree.

Student Debt is not only Restricted to College Graduates

Most students pursuing a graduate degree tend to live with the belief that debts over student loans are only directed to graduates. However, they are mistaken. Even, students who drop out of college are burdened by debt. The situation tends to get worse for them because the students are most likely to be unemployed. Alternatively, even if the college dropouts get to earn, the income tends to be around $5,000 more than graduates.

Student Debts are not Always Bad

With employment uncertainty increasing at a rapid rate, most students are often advised to stay away from student loans. However, what most people fail to realize is that staying away from debt would make them unable to continue with their higher education. This might also lead students to take up work to meet the rising costs of education making them unable to complete the degree. In such situations, it is to be noted that relying upon loans for continuing with higher studies is not always bad. All you need to do is enroll at a college that offers accredited degrees and pursue a career-oriented course.

Colleges are Not Responsible for Students Defaulting on their Loans

Educational institutes often cite several factors owing to the reasons for dropout like joining a job or delay in enrollment. It is to be understood that these are mere choices that the students need to make for meeting the rising educational costs. Colleges have taken or can take multiple steps to control the rising educational costs. Most importantly, colleges can take the responsibility of teaching students about money management. They can also consider guiding the students about the course to take up. Additionally, the colleges can also consider developing default assistance plans, especially for students running the risk of being a dropout.

For-Profit Colleges are not only to be Blamed for Rising Student Debt

Most often, critics tend to blame for-profit colleges for the increasing rise in student debt citing their shortcomings in offering a valuable degree. Well, though the for-profit educational institutions account for more dropouts and borrowing graduates, the others sectors of education cannot be ruled out completely.

It is to be remembered not everything related to student debt is bad and colleges are not only to be blamed regarding the rise in defaults. The approach to avoiding debts or reducing default chances should be positive.

Facts and Fiction of Student Debt

A. Brief overview of student debt in the US:

Student debt in the United States has reached unprecedented levels, with more than 45 million Americans collectively owing over $1.7 trillion in student loan debt. This debt is often held by young adults who have recently graduated from college, but it can also be held by older Americans who went back to school or took out loans for their children’s education. The high cost of college tuition, coupled with limited financial aid and stagnant wages, has contributed to the rapid growth of student debt over the past few decades.

B. Importance of understanding the facts and fiction surrounding student debt:

There are many misconceptions and myths surrounding student debt, which can make it difficult for borrowers to make informed decisions about their loans. It is important for people to understand the facts and fiction surrounding student debt so that they can make informed decisions about their education, career choices, and financial future.

For example, some people may believe that student debt is only a problem for young people, but the reality is that many older Americans are struggling with student debt as well. Similarly, there is a myth that everyone with student debt should go to college, when in fact, college may not be the best path for everyone. Understanding the facts and fiction surrounding student debt can help individuals make informed decisions about their education and career choices, as well as their financial management strategies.

Furthermore, understanding the facts and fiction surrounding student debt can also help policy makers and institutions develop effective solutions to address the student debt crisis. Accurate information can inform the creation of policies and programs that help borrowers manage their debt, provide better access to education, and ultimately improve the overall financial health of the country.

II. Fiction: Student debt is only a problem for young people

A. Explanation of the myth:

The myth that student debt is only a problem for young people stems from the fact that many people associate student debt with recent college graduates who are just starting their careers. However, the reality is that student debt is a growing problem for Americans of all ages. Many older Americans have gone back to school to improve their job prospects or help their children pay for college, and have taken on significant student loan debt in the process. This has resulted in a significant increase in student debt among older Americans in recent years.

B. Statistics showing the prevalence of student debt among older Americans:

According to a report from the Consumer Financial Protection Bureau (CFPB), the number of Americans aged 60 and older with student loan debt has quadrupled over the past decade, from 700,000 in 2005 to 2.8 million in 2015. The report also found that the average student loan balance for older borrowers has increased from $12,100 in 2005 to $23,500 in 2015.

In addition, the CFPB report found that many older borrowers are struggling to repay their student loans. In 2015, nearly 40% of federal student loan borrowers aged 65 and older were in default, meaning they had not made a payment in more than 270 days.

C. Discussion of the long-term impact of student debt on borrowers of all ages:

The long-term impact of student debt on borrowers of all ages can be significant. For older borrowers, student loan debt can delay retirement and hinder their ability to save for retirement. It can also impact their credit score and their ability to access other forms of credit, such as mortgages and auto loans.

For younger borrowers, student debt can impact their ability to start a family, buy a home, or save for retirement. It can also influence their career choices, as they may need to take higher-paying jobs to repay their loans instead of pursuing a career they are passionate about.

Overall, the growing problem of student debt affects borrowers of all ages and has significant long-term impacts on their financial well-being. It is important for individuals and policy makers to recognize the breadth and depth of the problem in order to develop effective solutions to address it.

V. Fact: Student debt can have a negative impact on mental health A. Explanation of the fact B. Discussion of how student debt can cause stress, anxiety, and other mental health issues C. Importance of addressing the mental health impact of student debt

VI. Fiction: Student debt can be easily discharged in bankruptcy A. Explanation of the myth B. Discussion of the legal requirements for discharging student debt in bankruptcy C. Importance of considering other options for managing student debt