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4 Factors Which Prevent Student Loan Problems From Ending.

A problem can be eliminated if the root cause is known, but what if the problem is result of several factors which have been accumulated with time and have become a part of the system and culture of a country?

Student Loans problem which is now a thorn in the flesh of middle class Americans, and an election agenda for politicians, has shown continuous growth over the years, and is showing no sign of recovery. Who is to blame for this problem? It is not the consequence of a malpractice or a malfunction of a community or Government body solely. There are so many elements deeply rooted in America’s socioeconomic structure that make this problem almost impossible to solve. Here are the factors which are making Student Loan a bane for the country.

1: Better career opportunities after higher education: Higher education is an investment that a student makes to earn its return throughout the life in terms of a steady and secure career path with a better pay. According to a research by The college board, On average, the benefits of a four-year college degree are equivalent to an investment that returns 15.2% per year.The potential for higher earnings and broader job prospects is prompting more Americans to go for higher studies. Individuals with graduate degree earn substantially (50% approximately) more than the individuals who are just school passouts. The benefits of higher education also extend to the better chance of being employed in the first place. “The more you learn, the more you earn”, so the potentials are high enough to justify approaching student loans as the most convenient way of payment for higher education.

2: The virtue of Student Loans: Student loans are blessing for a large group of people who can not afford higher education on their own. It is the only source of funding which can help them fulfil their dream of higher studies, better career and better financial status. Students can finish their education without worrying about paying for college fees or loan repayment, while in school, and even within a grace period of 6 to 9 months after that.

Additionally, For many students an education loan is the first major financial event and is the perfect opportunity to build a solid credit history. By keeping up to date on all student loan payments a borrower can begin laying the foundation of a good credit score, which will be beneficial in future.

Above all, student loans are easily available. Government lends money without even knowing whether the borrower will be able to pay it back or not. Loan amounts are often determined irrespective of the scope of the profession or degree, and the potential of its future income.

3: A great Source of revenue to the Government: According to Congressional Budget Office estimate the federal government will bring in $110 billion from these loans in the next decade.” In 2013 Government made $41.3 billion from Student loans which was down $3.6 billion from the previous year but still a higher profit level than all but two companies in the world: Exxon Mobile cleared $44.9 billion in 2012, and Apple cleared $41.7 billion. It's a great deal for the government, to make some money while helping young Americans pursue higher education so they can earn more down the road and pay more taxes..

4: Expensive education and high cost of living: Since 1978, college tuition and fees have increased by 1120%. During that same period, the price of food has increased 244% and medical expenses 601%. In fact, tuition prices have gone up four times faster than the consumer price index. Although the increase in rate has been lower in the past few years, students are still borrowing more compared to previous years. The reason is that although the net tuition increase rate may be relatively flat, the costs of room, board and student services have increased substantially as colleges have competed for other facilities. So it’s not just the tuition fee that a student has to bear. Cost of education including other expenses makes it difficult for students and their families to afford education on their own and makes them dependent on Loans.

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