Student loans are crucial to financing college educations, yet millions of borrows are in default. There is signs that the system is in dire need of improvement. New research on student loans is reinforcing the crucial lesson of behavior economics. What seems like minor details matter in a major way. Who answers the phone at the loan company, what choices you are offered and how they are framed can have a major effect on your financial well-being. Federal policy ignores these facts as the federal government owns the loans, private companies collect payments, keep record and communicate with borrowers. Seemingly small missteps can send a borrower spiraling into default. The loan companies have misdirected payments, lost paperwork and charged the wrong interest rate. Currently, we have a punishing system of garnishment in place for student loans. It makes little sense to have the feral government seize money from these most vulnerable people while shying away from a sensible system.
https://www.nytimes.com/2018/04/06/business/how-to-clean-up-the-student-loan-mess.html?rref=collection%2Fsectioncollection%2Fbusiness
5 comments:
I think this is a very interesting topic because there are so many things that go into student loans and college. One thing I see is the price of college has increase so much. Just since being here at OWU the price has increased so much. However the amount of kids who receive scholarship money is also very high. It seems rather strange the the price of attending a school is more than the US median income. I think the situation is such a mess but things need to change from all parties involved in order to be more efficient.
One of the reasons for the prices of college in the US to be so expensive is because usually there are better schools and you will get a better education, but I also wonder how much of this price difference is due to the fact that here people are used to having this big loans in order to pay for college. Here going 200 thousand dollars in debt by going to school is not seen as something unimaginable, a lot of people do it. This causes that people see this as normal. They feel like they are paying for their future, so they don't mind "investing" that much in themselves. But this could be one of the reasons that colleges are raising their prices so much because they see that regardless how much they charge they will keep getting students. Hopefully, this gets mixed and the government helps students to get better deals and a more efficient way to get loans where they are not overpaying.
Student loans have been a significant issue in this country for a long time and it looks to be only getting worse. I believe loan companies are working in a failed system and federal regulators need to step in to improve the system because as we know education is a key component of finding financial success in the future and the country should be valuing this and stepping in.
I disagree with Felipe, the biggest reason prices of colleges in the US is not the actual quality of the education, but the size of the administration and the quantity of the other, non-academic things that get added into the "college experience." Honestly, I don't have the numbers on this, but I would bet that the largest expenditure at OWU is not the professors salaries or cost of education materials, but rather the upkeep of all the different social programs, sports, housing, food service, etc. Despite the amount of scholarship discounts that are given, we're not paying for our education as much as we are paying for a four-year-long semi-real-life experience.
That being said, I have so many friends who are unable to pursue a job in their field after graduation because their loans (taken out for whatever reason)begin to apply as soon as two or three months after they graduate. Unless you're lucky and chose a competitive major, this is unsustainable. I think this article highlights some important problems in the way student loans are given and collected, and I think if they were corrected or regulated, our economy could reap the benefits of having a younger generation not crippled by debt.
I don't think that the quality of education is so much better now a days that it should have caused college costs to skyrocket. The requirements for students to graduate now are to have so many credit hours, experience and enough money to pay tuition/student loans, all to get a starter job that probably pays half of that (and no offense but sometimes people don't even have time to gain experience because they're too busy working side jobs to pay for college). Jobs that are probably under the employment of an older generation that believes the younger generation just needs to "save up" like they did. The reality is that times have changed and the college education system is no longer in favor of the student.
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