Like millions of other young adults, I wasn't able to buy a beer before being allowed to borrow thousands of dollars from the government. Sitting in the small office with the contract before me, I felt like I was making a deal with the devil himself. There was no certainty I could get a job that would pay enough to cover student loans right out of college. And now, nearly 5 years later, student loan repayment is a minefield no one could have imagined.
According to an article published by Forbes, "The average for all four-year institutions comes out to $26,120 per year. This brings the total cost of attendance to an astronomical total of $104,480 over four years."
Of course, there are ways to help make that chunk of change hurt a little less, but overall, many young adults are left with such debt that affording a house or buying a new car seems like an unattainable dream. I am not including the people who take five years to finally decide a major, I am talking about those of us who listened to our teachers, guidance councilors, and every other adult who said college was the way to get good jobs and a secure future, and managed to stay on course.
2020 only amplified the financial difficulty student loan borrowers deal with. According to CNBC, "Less than 11% of people with federal student loans are repaying them during the pandemic". With layoffs, rocketing prices on food and necessities, and the uncertainty of the economy, student loans are low on the list of priorities.
Take my household for example. Out of a household of four full-time employed adults, two were fully laid off and two were cut from 40 hours a week to 20 with the possibility of more time being cut. Rent needed to be paid, food still needed to be put on the table, and we needed to keep the lights on. At this point, student loans were not a priority as far as necessities went. And while the pause on student loans was a huge relief for millions, that will run out on December 31st, 2020. With COVID-19 still impacting our economy, that upcoming date brings anxiety for anyone with a student loan.
Biden and his team have proposed forgiving at least a portion of student loan debt, up to $10,000 per borrower, according to Forbes. However, in a follow-up article by Forbes, they discuss the pitfalls of this idea. Forbes states, "because the canceled debt can be a taxable event, borrowers could owe substantial taxes, which would be due all at once. And if the borrower doesn’t pay immediately by the tax deadline, there can be substantial penalties."
Needless to say, that is not a reassuring thought. Even before the pandemic, my savings was nothing to brag about and many other borrowers can say the same. Image getting a surprise bill that you have to pay upfront or face the wrath of the IRS. That alone is enough to give anyone with a student loan nightmares.
But trying to manage current student loan debt only scrapes at the surface of the problem. Forgiving current standing debt will temporarily remedy the problem, but what about future borrowers?
We need to look at why college has become so expensive. Today released an article citing four reasons as to why this is including state funding, demand, offering expansion, and the student loan system. While these are legitimate reasons, it also points to a disturbing reality.
From the time we enter school (and depending on the household, even earlier), we are told the best way to gain a stable and successful life is to go through higher education and get a degree. Little emphasis has been placed on trades such as auto body, welding, carpentry, and diesel tech (to name a few). For years, society has made such trades the butt of jokes and created the image of the uneducated blue collar worker. And while this has stemmed an economic dilemma within itself, it is only one branch of the mess created by our higher education system.
There is no doubt, the higher education system is an absolute nightmare. Erasing student debt, even a portion of it, will only scratch the surface of a much larger problem. We have to address the problem of over-inflated tuition, useless prerequisites, and a multitude of other issues. Until we do so, the problem will only continue to get worse.