The student loan crisis has increased in the last few decades. In fact, student loan debt has turned into a completely fledged crisis for students and even for former students. Students have been under enormous debts throughout their lives. They were unable to pay on time and ended up in default payment. Education experts and policymakers are in endless debates about how to handle this issue. Most of the solutions suggested in these debates have not been effective. The lack of knowledge by student borrowers regarding what they are truly getting into when they take a loan is the main key issue of the student loan crisis. To check this problem, students must be appropriately instructed, guided, and advised by consultants from the education department about the risk and consequences attached to taking a loan.
Students should also be guided and advised in selecting a college that is financially best for them. So they will not choose unlikely college and to subsidize their college education ended up taking huge debt which they can not repay. There is additionally different problem such as lack of government policies and regulations. Because of this, many financial establishments take advantage of students who need financial aid and keep them in lifelong debt. To eradicate this problem, the government should intervene, take control and punish such establishments. Following are the few solutions to overcome the student loan crisis:
Awareness about student loan
Government and other educational authorities should instruct, advise, and counsel students about the terms and conditions of borrowing the student loan. It is the initial move in settling the student loan crisis. Students should be given adequate financial insight ahead of time before they even start college. Paying for college is the first financial transaction for the students, and it is necessary to be aware of it. It is where government and educational authorities like school boards provide satisfactory financial information about colleges to the senior students who are about to graduate from high school by holding seminars. Another thing that government should enforce is to eliminate the government profit on students loan. The student loan is already a lot of problems for the students, and the federal profit on student loans increases interest rates.
Student loan forgiveness after 10 years without condition
Currently, the condition to get public service student loan forgiveness is to finish 120 months full installment of loan on schedule. One hundred twenty months installment implies that students have to work ten years at public service and non-profit employers. Mostly it takes longer than 10 years for students to complete 120 months. When students cannot complete the condition on time, there is a 98 percent rejection rate for the public service loan forgiveness. Another report predicts that 80 percent of student loan borrowers will get rejected for student loan forgiveness in the following five years. Not any condition on student loan forgiveness will automatically allow student borrowers to get loan forgiveness anyhow in ten years.
The most feasible solution is free tuition at universities and colleges. A free college education will help low-pay students who do not attend college because of high college fees or fear of loan debt. Also, allowing low-income students to cover other expenses of college education from financial aid. A tuition-free four years program will make college affordable for everyone. College affordability will help students concentrate on their education well, and they do not need to take help from online assignment writing service. Educational experts believe that tuition-free graduation programs will help students to some extent, but they have to take debt for other living expenses.
Lower or cut the interest rate
The main problem for every borrower is constantly increasing the interest rate on the loan debt. Many students feel about paying back a loan but mostly back out because the payment does not even cover the interest on the debt. Making interest rate zero or lowering the interest rate on existing loan debt will significantly help the student borrowers. They can easily pay off their debt without the worry of growing principal amount. Or the other option is to allow students to refinance their student loans which will help them pay the loan at today’s interest rate. Refinancing is the way to get the new interest rate on your old loan debt; it will help borrowers pay off the debt at a new interest rate.
Even working all day at low-paying jobs, students can not make enough money to pay the principal amount. Which makes student borrowers pay back the debt for more than 20 or 25 years in the future. Income-driven repayment is the plan that will help students to lower their monthly bills according to their family and income. If students have a high student loan, can not afford the current payment, want to avoid loan default and late payment, have low income, and are unemployed, this is the right solution. It can be even zero percent if the student is unemployed. Government should improve it further to make it simple for students to understand what benefits it accommodate them.
Expand Pell grant
The Pell Grant is a non-repayable student loan provided by the federal government for higher education. Typically, students can receive a Pell grant for six years or 12 semesters. But it is provided based on financial need. In order to be eligible for the Pell Grant, students need to have EFC (Expected Financial Contribution) below $5,846. The ideal cost that the Pell grant covers is around eighty percent. But according to the institute of college access and success, it currently covers less than twenty-eight percent. The main focus of the Pell grant is students with low financial backgrounds. The expenses of college for low-income students.
Student loan debt is certainly a national crisis that affects students and their education. Furthermore, students have to pay it mostly throughout their lives. Government has to take serious steps to overcome this issue.