Student debt is a modern day issue that is presented itself as a major financial problem in the U.S. The debt continues to increase and choke hold students who are attempting to earn a higher education. Simply, student loans are given out too easily. The Burner test (Watson, 2014) was developed to help determine which individuals should be allowed student debt forgiveness. But there is no test that is done before hand to determine if in individual should be allowed to take out a federal student loan, when there clearly needs to be.
So how did this problem begin? In 1978, congress passed II U.S. 523 “undue hardship”, which made discharging educational loans more difficult for student debtors (Bedinger, 2014). Basically, a student had to prove that they couldn’t live in a minimal standard of living if forced to pay back their loans, and yet they somehow had to have made good hearted attempts to pay back their loans. With this difficulty of student loan forgiveness, many individuals who were unable to pay back their student loans were stuck with the burden. Today, student loans have topped over $1 trillion. It has been the only form of consumer debt that has consistently risen since 2003 (Watson, 2014). Since 1980, college prices have raised twice the amount of inflation (Bryfonski, 2012). Just two years after the “undue hardship” law was passed. This is upsetting, as the high amount of student loans and student debt have been building up for a while, yet no real solution has been made.
So how has this really been affecting U.S. citizens? 70% of graduates have an average of $25,000 of student debt (Konczul, 2015). The Kapper family of six, two parents and four children, have a total of about $80,000 in student debt already. Only two of the four children are attending college at this point (CNBC, 2010). All the parents want is for their children to have a better life then they do, and achieve a higher education. Both of those children have already surpassed the average of $25,000. Nick and Emily Hought are struggling to pay their $250,000 loan (CNBC, 2010). Both believed they could pay it off, but were unfortunately unable to find the jobs they needed to pay off this loan. On a broader scale, student debt has been found to cause delays in marriage and investment in housing (Konczul, 2015). People like the Kapper family and the Hought’s are continuing to add to the student loan and debt amount, struggling themselves to pay that amount like many other U.S. citizens.
So how can this problem be fixed? A test done before giving and individual a student loan will do the job. Student loans are too easy to get. Nearly every student can qualify for a student loan. Now, whether private loaners want to continue given out loans to whoever they want is up to them. But federal loaners can assign a test to see if an individual is capable of paying back their student loan in the near future. Based off any income they receive, whether students are living at home while going to school, or how good their credit is if they have attained any credit is what should be tested. Now, I believe every individual has the right to strive for a higher education if they chose to do so. But at least a test beforehand will let the debtor know whether they are recommended to take the loan or not. This will prevent some from taking out loans that they cannot pay.
So how did this problem begin? In 1978, congress passed II U.S. 523 “undue hardship”, which made discharging educational loans more difficult for student debtors (Bedinger, 2014). Basically, a student had to prove that they couldn’t live in a minimal standard of living if forced to pay back their loans, and yet they somehow had to have made good hearted attempts to pay back their loans. With this difficulty of student loan forgiveness, many individuals who were unable to pay back their student loans were stuck with the burden. Today, student loans have topped over $1 trillion. It has been the only form of consumer debt that has consistently risen since 2003 (Watson, 2014). Since 1980, college prices have raised twice the amount of inflation (Bryfonski, 2012). Just two years after the “undue hardship” law was passed. This is upsetting, as the high amount of student loans and student debt have been building up for a while, yet no real solution has been made.
So how has this really been affecting U.S. citizens? 70% of graduates have an average of $25,000 of student debt (Konczul, 2015). The Kapper family of six, two parents and four children, have a total of about $80,000 in student debt already. Only two of the four children are attending college at this point (CNBC, 2010). All the parents want is for their children to have a better life then they do, and achieve a higher education. Both of those children have already surpassed the average of $25,000. Nick and Emily Hought are struggling to pay their $250,000 loan (CNBC, 2010). Both believed they could pay it off, but were unfortunately unable to find the jobs they needed to pay off this loan. On a broader scale, student debt has been found to cause delays in marriage and investment in housing (Konczul, 2015). People like the Kapper family and the Hought’s are continuing to add to the student loan and debt amount, struggling themselves to pay that amount like many other U.S. citizens.
So how can this problem be fixed? A test done before giving and individual a student loan will do the job. Student loans are too easy to get. Nearly every student can qualify for a student loan. Now, whether private loaners want to continue given out loans to whoever they want is up to them. But federal loaners can assign a test to see if an individual is capable of paying back their student loan in the near future. Based off any income they receive, whether students are living at home while going to school, or how good their credit is if they have attained any credit is what should be tested. Now, I believe every individual has the right to strive for a higher education if they chose to do so. But at least a test beforehand will let the debtor know whether they are recommended to take the loan or not. This will prevent some from taking out loans that they cannot pay.