By Demetrius Dillard
Student loan debt is a worsening issue in the United States, and is indeed a ‘crisis’ in every sense of the word. Though there are numerous efforts to cancel loan debt, and while lawmakers and political figures have introduced proposals to forgive tens of thousands of dollars in student loans specifically for those from moderate-to-low-income families — borrowers continue to struggle with repayment at alarmingly high rates.
High schoolers preparing to take the next step in their academic career pursue a college education for a number of reasons, and are often under the impression that whatever field they major in will lead to a promising future.
However, many college applicants fail to consider the exorbitant amount of debt they’ll be faced with after graduating – and that’s if they even graduate, because there are countless college dropouts who still have to repay every penny they borrowed to attend school, on top of accrued interest.
Regardless of the job a college graduate lands, student loan debt can still lead to ongoing issues and can hinder one’s financial freedom. Or at least the path to financial freedom will be far more difficult with debt in the way.
Increasing amounts of debt can take a toll on one’s credit, which in turn has an adverse effect on building wealth. This is too often the case especially with Black students, many of whom come from families who do not have the financial bandwidth to pay for school out of pocket or pay off loans in a short amount of time.
Many college graduates find themselves working just to pay off student loans, which couldn’t be further from the supposed American dream that was sold to them growing up, which typically goes something like this: Matriculate through grade school, go to college, enter a successful career in corporate America, find a spouse and live comfortably, happily ever after.
For most borrowers, especially in the 21st century, that American dream narrative seems to be more of a fantasy than anything else.
According to a report by Inside Higher Ed, 66 advocacy groups have urged Congress to cancel student debt in a way that would help all borrowers, bringing the “greatest benefit to many struggling low-income borrowers who would likely see their debt extinguished.”
The Inside Higher Ed report is an op-ed suggesting five reasons why equity advocates should support student debt cancellation, and was written by Tiffany Jones and Victoria Jackson from the Education Trust.
A great deal of decent or good-paying occupations require a degree from an accredited four-year institution or an equivalent credential, making it seem almost mandatory for children to have their minds set on college if they want success in the corporate world.
Thus, sitting out of college isn’t much of an option, noted Jones and Jackson.
“In the last recession, students flocked to higher education institutions, especially community colleges, which are the most affordable option. Yet student debt has still more than doubled. Today, about one in 10 students default on their student loans — a rate that’s higher than many other types of consumer debt — which can have lasting negative effects on quality of life,” the article says.
“Unfortunately, the only way that many students can afford to go to college is by taking out loans… That’s especially the case for people of color, who often need additional advanced degrees to boost their odds of getting a good job and earning as much as their white peers.”
Jones and Jackson bringing racial disparities into the picture is an observable fact no one can ignore. Existing racial inequities in higher education play an underlying role in the student loan debt crisis, they argue. They highlight a troubling statistic: three of four Black students who attend for-profit colleges without graduating wind up in default.
“The disproportionate impact of student debt on Black and Latino students isn’t a random occurrence; it’s the result of existing racial inequities that student debt then compounds,” wrote Jones and Jackson.
“For example, about half of all U.S. undergraduates are people of color, yet Black and Latino students are severely under-enrolled in selective colleges and universities, which have a higher return on investment and more financial resources to support students. At the same time, a disproportionate share of Black students enroll in for-profit colleges, which produce worse outcomes for their students.”
As the nation’s economy still recovers from the deleterious effects of the coronavirus pandemic, college enrollment is constantly declining, according to reports by INside Higher Ed, Forbes, Politico, NPR and other nationally known media outlets.
Student loan debt relief programs may not increase college enrollment numbers, but it may be a start to not only putting recent college graduates on the path to true success and financial stability, but may also be an opportunity to rebuild the economy.
According to Forbes, the cumulative student loan debt amount in the U.S. has reached a record $1.7 trillion, and is projected to grow.
Daniel M. Johnson wrote a piece entitled “What Will It Take to Solve the Student Loan Crisis?” that appeared in the Harvard Business Review. The student loan debt crisis is only a microcosm of a much larger crisis facing America right now.
“In addition to the ordinary financial pressures and obligations that come with young adulthood, studies show that many of those struggling to repay these mountainous student loans are also experiencing serious mental health problems, caused in large part by the crushing weight of these loans,” he wrote. Similar to Jones and Jackson, he presents several solutions to the student loan debt crisis, one of which is finding relief particularly at the federal level.
“A good starting point would be a bipartisan Congressional Commission on student loan remediation. A Congressional Commission could identify and propose reasonable, broadly acceptable, long-term strategies that Congress could support and enact,” wrote Johnson, a professor of public policy and economic development at the University of Toledo.
“We are long overdue for genuine, transformative reform. The good news is that we have the tools in our toolbox; the nation’s higher education system can be reformed.”
