Loans: The Real “Game of Life”- The formula for keeping students buried in debt

BY JENNIFER MONTAGNE

For graduating high school students, the loom of anticipated college debt hangs heavily over their experience. The necessity of a bachelor’s degree has been cemented into students’ consciousness since elementary school, but rarely are they schooled on how to pay for their education and keep on paying. On average, a four-year private university costs over $25,000 a year, according to collegeboard.com. There is a significant disconnect between the earning ability of undergraduate students and what they will owe after graduation. It is morally reprehensible for a society to force a group of graduates into thousands of dollars of debt, hold them to that debt well into their thirties, and offer them substandard work opportunities after they graduate. How can we complain about staggering American debts when it is private and public lending groups that impose high and variable interest rates on loans and run a monopoly on those with limited means?

Lending companies prey on students and their families’ inexperience during the tumultuous time following high school graduation. Every spring, beginning their senior year of high school, college students are required to fill out the FAFSA (Free Application for Federal Student Aid), an extensive and lengthy financial aid questionnaire that requests the specific earning and net worth figures of both students and their parents. Colleges receive this information and base their financial aid package on a student-to-student basis. How can the federal government, confronted with the actual earnings of real people, continue to impress soaring interest rates and the growing cost of public education? By offering them limited options, they deny hundreds of thousands of students an equal access to higher education.

In terms of lenders, student’s choices are limited. For Vermont students, aside from the federally subsidized Stafford loan and the Parent Plus loan which places the responsibility of loan repayment on the student’s parents, there is only the Advantage Loan which boasts no cap and has varying quarterly interest rates. Unlike the subsidized Stafford and Parent Plus loans which only begin to accrue interest six months after graduation, the Advantage loan accumulates interest from the time the loan is taken out until it is repaid in full. Currently the interest rate for the Advantage loan range from 8.30% to 5.05% depending on the credit history of the loan’s cosigner. According to Vermont Student Assistance Corps, the average time to pay the loan back is 15 years. Not only are America’s young, college graduates buried in four years of debt, they are accountable for the interest as well, additional money that in no way aided their education.

Just how high can the cost of education go before students and their families can truly find no way to afford it? Mandatory post-secondary education is a relatively new concept adopted within the past twenty-five years as the norm. Today’s generation is placed in a unique position: to slog their way through immense debt after graduation or to struggle through typically low-paying, dead-end jobs. Those who fair best are people who take on a specialized skill or attend trade schools where they can guarantee that their services will be in high-demand after they graduate. Today’s students experience a “Game of Life” scenario where they are forced to choose between attending college or entering the work force, except it’s not a game and the implications of your decisions are very real. Barriers to education have never just been limited to which college or university students are academically able to attend. However today, social and economic limitations to education that middle and lower-income households face have been dragged out into the light and discussed openly by school administrators, politicians and students themselves and still little is being done. And what could be done?

Short URL: http://www.themountaineer.org/?p=401

Posted by GMC Voices on Mar 3, 2009 Filed under First-Person. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry