Unpaid student loan debts reached a staggering $1.56 trillion in 2019––the highest it’s ever been. Nearly 45 million Americans suffer from this crisis. And it’s the second highest consumer debt category in the United States, according to recent statistics from the New York Federal Reserve.One of the biggest contributors to this crisis is the cost of going to university, with out-of-state tuition and fees averaging $26,290 annually for a public college, and $35,830 for a private school. The New Yorker reports that from the late eighties up until now, these university fees have increased at a rate four times higher than that of inflation, and eight times that of household income.
What States Can Do
In 2018, the average student loan balance per borrower reached $35,359, an all-time high at that time. Many fear that the student loan debt bubble could well burst. A study conducted by LendEDU found that the average debt-per-borrower in the state of Ohio is $28,947, and ranked 25th in the nation. Several states have created their own versions of a student loan bill of rights to give borrowers simple information regarding debt disclosures and repayment strategies. It’s highly possible that Ohio legislators can also work on a good number of initiatives to reduce the average debt-per-borrower, while additionally helping students take control over their loans once they begin to repay them.
A Case Study
A woman from Ohio just recently managed to completely pay off her student loans amounting to $120,000 in under six years. This is a huge accomplishment as it takes the average American over 21 years to do so. Nichol Dulaney credits this to her decision to keep track of how much she owed with the names of each lender and all other details, together with small sacrifices like not going shopping. She was even able to keep her college car in the process. Considering that auto title loans are arguably the quickest way to receive the cash you need, LoanMart in Dayton, Ohio highlights that the average application process only takes around five minutes to complete, but it is still vital for students to weigh up their options. While many fall into a seemingly endless cycle of debt and use their vehicles as a means to pay off their loans, some, like Dulaney, manage to accomplish this through good old sheer hard work.
For some, however, the reality is bleaker. NPR reports that borrowers who do not finish their degree have a harder time paying off their student loans. The default rate for borrowers who didn’t accomplish their degrees is three times higher than graduates who earned their diplomas. Defaulting on loans prevents you from seeking federal student aid which would help you finish your degree––and as a result, get a higher paying job. It feels like you can never win. Debt can take its toll on your credit score, among other things, and make it even harder to go on living comfortably. While education is paramount to success for a number of students, they are left to seek out alternatives, such as completing their degrees in other countries, where education may be cheaper. For example, many students have begun studying in Chile, as universities there offer degrees in English and for various majors at lower costs. Their government has invested in education in such a way that they are able to offer several scholarship programs, are respected for their research and innovation, and their political stability.
The student debt crisis looms and students are well aware of this––whether they are seeking degrees, have finished degrees, or were unable to complete their degrees. Education has become cumbersome with the reality that they will be buried in debt. While they can take it upon themselves to manage their debts and strategize to pay them off, it’s evident that this is an institutional problem. Therefore, this institutional change can be the work of Congress, so that student borrowers can ease their burdens while still seeking success.