Monday, October 25, 2010
Placing the Blame as Students Are Buried in Debt
Students are paying struggling to pay back for education debts they took over four years ago and contribute to the crisis. The question lies with who to blame. Many families work over their emotions rather than logically think of consequences and how they will deal with them later. They borrow large and unsustainable loans to fund an education in a top-choice school, not realizing the debt that will pile up for students after they graduate. The article, however, also suggests that Financial Aid and Admissions Officers at universities should consider ways of informing students of the deep waters they are entering before the students find themselves in financial troubles they are unable to handle for years to come. In addition, lenders must be more stringent when lending out credit, especially to students who they are unsure will be able to repay loans. The concept of stimulating growth and development through borrowing must be curbed before the recession continues to engulf us further. The government should attempt at creating more scholarship and grant programs based on merit, improvements, innovation and various research programs. This will encourage students to be able to pay for education through achievements and progress in many forms as opposed to either taking on massive loans at such a young age (without understanding the future consequences) or choosing dropping out.
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I believe that the whole system of working on credit that the US is famous for should be eliminated or lowered. As we have seen from our lectures, an increased saving rate eventually increases consumption from an increase in capital and thus income. In such a case all individuals involved win. In such a case, students or anyone for that matter will not have to take out such large loans and instead they will work on paying the fees through their savings.
ReplyDeleteAlso, an interest rate on savings should be made for those kids interested in saving for college in the future. These will be above normal savings rate so that people are encourages to save. These funds will be directly used to pay college fees and so people will not be taking advantage of the high rates.
This is a big problem for many students across America. In this point in time, many people feel like enrolling in college is a must do in today's economy. The problem is many colleges are too expensive, and as a result students take out loans. Some of these loans put these young people in debt, and some of the students find it hard to over come. This is a problem because it is putting to much obstacles on education. The government needs to find a way to spend more money on education, and take it away from areas that are less important.
ReplyDeleteThe entire US economic system is so dependent on credit that there is still an unestablished concept of savings. It is not unreasonable to say the crisis during the recession was because of the extremely low levels of savings and high levels of credit. People had no savings left when the financial institutions collapsed. The standard of living of Americans first picked up in the 1970s and 80s because of higher consumption which was mainly facilitated by borrowing. There needs to be a shift from consumption to savings and investment (much of which should be invested in research and development)
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