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Valene Ebersole
Reply from Valene Ebersole
Student loans are a great option for paying for your education after exhausting all other measures. Ideally, every potential student will look at all grants and scholarships offered at their prospective college before relying on student loans. Having a job while attending school is another great way to lower one’s need for student loans and could enable one to graduate debt free. Personally, I feel like many young people only see the fun aspect of college and many students get an unrealistic idea of how much their future job will pay and how much their total student loans will cost them. According to Avery & Turner, (2012) “researchers have documented that students often misunderstand financial aid packages, fail to understand the much greater cost of consumer loans (such as credit card debt) relative to student loans, and miscalculate the trade-off between academic study and market work” (p.168).
The federal government affects student enrollment in how easy they make it to qualify for federal student loans. There are no stringent requirements and almost anyone can get ahold of these loans. This can enable more students to come to college and it also means those who do come often take out loans. The more loans being used means there are more defaults on those loans as well. Looney & Yannelis (2015) talk about how the middle class holds the highest amount of student loans as it is the middle class and affluent students that statistically go for graduate degrees. Graduate and doctorate degrees are notoriously very expensive. State government contributes to student enrollment in how in recent years states have drastically lowered the amount they give towards higher education. This makes colleges offer less class option and degrees, lay off teachers and staff and raise tuition. Higher tuition often means more loans for prospective students as well.
Skillings (2023) discusses how the difference in funding for public and private colleges is usually found in public universities receiving their funding from the federal government. Private schools usually receive their main funding from tuition, alumni and endowment gifts. Private schools often also are more expensive but have big financial aid packages.
Overall, I personally think it is a great resource to have student aid available for students, but I do wish school did a better job of sitting potential students down and going over job outcomes with them and what their future school loan payments will be. This way students can go into their college experience fully understanding what their total debts will be at graduation.
Jubilee Townsend
Aug 19 5:48pm
Reply from Jubilee Townsend
While I believe that student loans help many students and institutions, One would also have to say student loans present several challenges.Student loans primarily affects the financial stability and access to higher education. Many low income student have a desire to attend higher education, however the family may lack a good credit score and the debt to income is reduced in a negative manner, thus making harder for the student to get the loans they may need. According to “Weidman, J. C., & Yeager, J. L., Cohen, L., DeAngelo, L. T., DeLuca, K. M., Gunzenhauser, M. G., Jacob, W. J., McClure, M. W., & Sutin, S. E. (Eds.). (July, 18,2014.) “ TIn this perspective, student loans can potentially improve the efficiency of the economy by raising the supply of college-educated workers in the labor market. Moreover, because credit constraints are most likely to affect students from low-income families, student loans can reduce both educational and income inequality among those in the same generation and between generations. Higher levels of federal student loans may also reduce supply constraints generated by declining state-level support for public colleges and universities, reducing the extent to which collegiate attainment is deterred by insufficient educational offerings.” Which in turn creates a long term debt, that has an affect on the life line of the student and family. The For-profit institutions play a part in the amount of loans student take out as well. The
For-profit institutions target is to provide education that will make them money, thus they are ran like a business causing the coast to be at a much higher rate. While as one can see the nonprofit colleges target is to provide education that will help the students succeed. Most of the time this comes from Jr colleges. Financial aid significantly contributes to the everyday student success but also the amount of loans students are taking out has increased the loans debt as a whole.
According to Weidman, J. C., & Yeager, J. L., Cohen, L., DeAngelo, L. T., DeLuca, K. M., Gunzenhauser, M. G., Jacob, W. J., McClure, M. W., & Sutin, S. E. (Eds.). (July, 18,2014.) “This level of unmet need serves as a cap on the amount that a student will be permitted to borrow through federal loan programs and is the total cost of attendance less any grant aid (federal, state, or institutional). Economic models predict that students will exhaust borrowing from the lowest cost of capital first (sub-loans, though such a pattern does not always hold in the data. subsiddized loans, if the student is eligible), followed by unsubsidized government loans and private.” With that being said the most pressing issue is the long-term debt burden on students. This plays a factor in the chance of a delay in their life milestones such as: Becoming a hime owner or starting a family. Then there is the burden of high interest rates that can exacerbate this problem, thus making it harder for graduates to repay their loans.
Additionally, the complexities of entering into this loan contract based of of the school, major and job outcomes; has provided many students loans shackles. According to Weidman, J. C., & Yeager, J. L., Cohen, L., DeAngelo, L. T., DeLuca, K. M., Gunzenhauser, M. G., Jacob, W. J., McClure, M. W., & Sutin, S. E. (Eds.). (July, 18,2014.) “How does the variation in the likelihood of completing a degree, choice of major, or where one will end up on the income distribution affect the decision to invest in a college education and, in turn, the decision to borrow for college? it individuals can make accurate predictions about whether they will complete college and what they would earn conditional on attaining a college degree, then most of the variation in lifetime earnings outcomes can be attributed to heterogeneity that is observable at the time of the decision differences in individual aptitude or preparation, choice of college, and so forth. It, instead, individual characteristics that are observable at the time of college enrollment provide lite information about future educational attainment and subsequent labor market outcomes, then an individual’s best estimate of the financial return to enrolling in college, and how much to borrow, must be based on a probabilistic assessment of earnings, which may encompass a wide range of out-comes” This is all part of the understanding of various repayment plans and forgiveness options, this can be overwhelming. Critics also argue that exorbitant tuition rates drive the need for large loans, thus perpetuating a cycle of debt. The backbone of all of this is the Federal and state governments they play a crucial role in encouraging student enrollment through financial aid, grants, and scholarship programs.
While providing Pell Grant. That help and yet put the students in more debt and allows access to a higher education.
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