Over The Years Loans - Free Essay Example

Over the years loans have become a very important aspect of financing higher education. Because of this, 1.3 trillion is the accumulated student loan debt that is owed by many individuals. Since loans are so important for students to pay for their college education they have no other choice but to apply and accept the loans. Unfortunately, this becomes a burden that falls solely on the individuals and in some cases their parents. 49% of undergraduates in 1943 borrowed in order to finance their college education (Zhang, 2013 pg. 154), yet six years later the number increased by 16%, which means each year the tuition is going up and increasing the number of student loans needed by many individuals. These individuals are knowingly putting themselves into debt just to get a college education. This research paper will examine the various reasons as to why student debt is the leading issue in the national and state debates on higher education and how individuals are getting into ample amounts of debt. Schools are unable to keep up with the increasing amount of individuals enrolling in college, while others argue that schools raise their tuition in order to get extra federal funding. I will also explain why African Americans have a higher chance of getting into debt than Caucasians. Another factor I will explain is the governments intention with financial aid and what exactly did the government expect to get out of the higher education act. The last factor is individuals and their parents being uneducated on college tuition costs and government funding, loans, grants and which loans will be easier to pay back than others. Studies show a close correlation between the government funding and the increasing college tuition. Lets take a look further into where government funding all started. Body Paragraph 1:The average 2015 college graduate owes more than 35,000 in student loans and takes about 17 years to pay it off. Currently, millennials make up about 40 percent of unemployed Americans (Edwards, 2016 Pg. 81). The massive debt owed by individuals all started in 1944, financial aid was given as a benefit for veterans who had just returned from the European and Pacific theatres. This financial assistance was known as the GI bill and was later known as federal student aid. Between 1944 and 1950 college became the new in thing (Edwards, 2016 pg. 80). The government advertised college by saying, stop wasting brain power by hopping more and more students would enroll and take advantage of the new higher education act. The government had hopes that more individuals of all socioeconomic backgrounds had the same opportunity as others. The higher education act was passed in 1965 which allowed students to borrow from private lenders and government loans. The higher education act proclaimed that a highs school senior anywhere in this great land of ours can apply to any college or university in any of the 50 states and may not be turned away because his family is poor (Jackson, 2013 pg. 337). As a result, 47% of students failed to repay due to misdemeanors or default on their loans because they have accumulated so much debt over the years but have no money or a job to pay it off (Wiederspan, 2014 pg. 566). Because of this, the government came up with two choices; the student can either file for bankruptcy or limit the amount of money that a university can receive for financial assistance. Since those solutions werent ideal, the government or as they thought of themselves as the fixers kept trying to come up with better solutions but ended up causing more harm for the future which leads to today 2018. The more individuals borrowed, the higher education costs kept rising and the higher education costs kept rising the more individuals relied on student loans to finance their way through college. Federal student aid has become the single largest source of financial aid available to undergraduate students (Wiederspan, 2014 Pg. 587). It is also the main reason why so many individuals are able to get a higher education but is also the reason why individuals are covered in student loan debt. The GI bill is where financial aid all started, lets see where it is today.Body Paragraph 2:Individuals and their parents are often given the choice to pay for college out of pocket with a payment plan, apply for federal student aid or apply for scholarships. All three are a hassle and if your uneducated on what steps of the process needs to be taken, the individual and their parents can still get confused and may not end up choosing the best option. This is when financial advisors become useful. Having a financial advisor is a great way to become educated on preventing student loan debt. Financial advisors are useful for financial advice about loans, scholarships, saving for college and general college questions. A financial advisors main priority is to educate you on ways to stay out of debt and to minimize the amount of debt that you will attain in the near future.Body Paragraph 3:Theoretical associations between student debt and college completion is more burdensome for blacks than whites (Houle, 2017 pg. 91) African Americans are known to come from economically disadvantaged fam ilies. Since these individuals come from economically disadvantaged families their needs for financial assistance is must greater than white individuals. There is a huge gap between African American parents and their income, wealth and education whereas to white parents. Because of this gap, most African American parents are unable to help finance their child throughout college and is one of the reasons why black students acquire more student loan debt and are more likely to borrow than white students (Jackson, 2011).The usage of loans within African Americans causes a rise in college enrollments and a better chance of college completion. Unfortunately, in most cases, about 70% of black student borrowers drop out of school, which causes African American students to become unemployed or to default on their loans. African Americans have become the leading race for borrowing federal student aid and is why the rising student loan debt for blacks is shown to create new risks and may repr oduce social inequalities in the transition to adulthood (Houle, 2017 Pg. 91). The students who drop out of college and is left with student loan debt are the main ones struggling to pay off that debt.Conclusion:Because of the enormous debt owed by many students, this has made them delay in making important consumer decisions such as marriage, home buying and starting a family. All of those consumer choices are things you look forward to once graduating from college and entering into real adulthood. Unfortunately, not being able to find a job that will pay off the enormous amount of debt that they consumed is hard and stressful. Stressful because the government only gives a short grace period before you have to start paying back the loan debt. This will especially apply to all the uneducated families and African American families. Because of their lack of knowledge and college education, they rely on financial aid to get them through college. Without financial aid, more generations of the uneducated and African American families will carry on and with it, they will consume so much debt unless seeking extra guidance.