Hernandez 1 Edwin Hernandez John Kubler English 114A 19 November 2013 Debt Crisis Throughout a persons life span

one of the main concerns is financially. People work hard and do everything possible for their families. They do whatever it takes to give to their family even if that means having to take out a loan. Loans are a way to borrow money from the government or a specific bank that will later be paid with interest. College students, home buyers and others take out loans but are inexperienced and unaware of loan debt. The economy of the United States is the worlds largest single national economy. Although the U.S economy has a debt of trillions of dollars it would be worse if debts were forgiven. President Barack Obama would like to reduce the huge deficit and has many proposals to reduce the debt within the United States. One of the proposals was if a college student took out a loan he or she would repay the money after years of graduating by using 10% of their income. Although people believe that it is difficult to pay big debts they should be aware of their economic situation therefore people should not be forgiven of their debt and it can affect the poor and middle class families. At times loans can be deceptive because someone may believe everything is good when truly he or she will not be able to afford loans. The documentary The Untouchables from Frontline explores bank loans and creating debts. The banks would give loans to people that in the long run wont be able to pay off their debt. I believe that the people should have gathered information about loans for homes. They saw the sum of the loan and basically jumped aboard the debt train. They may have gotten carried away and forgotten about their situation because they were mesmerized by the fact they were getting a house. For example, when someone goes

Hernandez 2 shopping and sees something they want they will pay whatever to have it. People should maintain their cool and not rush into things without having a plan. In the film it says there are millions of people in debt but everyone are adults that knew what they were getting into; therefore they should not be let off easy and pay their dues. Furthermore, Students that take out loans are liable for the money and should pay it back if not they can adopt a negative reputation. Robin Wilson, a newspaper writer, talks about situations in which students are viewed for example as overborrowers. He states, More often, the problem among students who go heavily into debt is that they are determined to attend their dream college, no matter the cost. Students wont take into consideration the facts about loans and only care about a high prestigious college. Huge sums of money are offered to students because they are more likely to accept. For example $40,000 can be offered a year when in reality $20,000 would be needed. It may even be like an impulse buy, you see it and want to get it before the offer expires. Students should be more aware of their situation before making any decision. They should not be forgiven for something they could have planned for or avoided. The government has trillions of dollars in debt with outside affairs; it wouldnt help to add more debt from domestic troubles. In the article, Forgive Student Loans by Richard Vedder, he questions whether it would be the right call to forgive student loans. Indeed, students do have a burden paying their debts but if the government forgives the debt the economy can head in a downward spiral. As stated in Vedders article, if the federal government shoulders the entire burden, we are adding a trillion or so more dollars in liabilities to a government already grievously overextended (1). The government has to pay for other expenses such as Medicare or national debts and having to pay more debts will hurt the economy. Vedder is just talking about forgiving student loans but if this paves the way for forgiving any other type of loans it can have a catastrophic outcome. The forgiveness of the debt can trigger any financial institution to a

Hernandez 3 financial crisis. With trillions of dollars and counting of debt the great infrastructure that is the U.S can have a severe crisis. The government being in debt can affect the poor and middle class families. There will be less money for the people who really need it because the government would be using elsewhere. The government expects to get back the money they loaned to students but if they forgive it then the students and American people suffer. There has been talk about a way to generate money that will be able to pay back loans to the government. In the article, Oregons Pay It Forward Program by Martha C. White, a new way of paying back college without having debt is discussed. White discusses a proposed program that will allow students to attend college tuition-free. Instead of taking out loans and piling up debt, students will have to pay the state a small portion of their income for decades. As stated in the article, for example, someone who got a 4-year bachelors degree would pay 3% of income for 20 to 25 years. The money would go into a trust fund set up to fund future generations of students(White 1). Whites solution seems simple because it doesnt seem like a heavy amount that would have to be paid as compared to a heavy debt of $100,000. Whites solution would be a long term investment for future generations which would allow for accessible education. One of my closest friends is attending his school of choice. He knew it would cost a lot of money to attend UC Davis so he decided to look for ways to pay for college. He gathered information and concluded that it would be too much money he will have to pay after college. He was able to obtain a lot of money from scholarships which has really helped him and he only needs to put a low sum of money from his own pocket. I think that he is a good example that people should be aware of loans and know their situation. People should gather information, learn to plan and manage money to avoid big debt.

Hernandez 4 One of my fathers friends wanted to buy a house. He rushed into buying his house because he believed it was a good price. As time progressed he realized that he needed help paying off the house. So he decided to get a loan to help him out but he began to fall behind on his payments. So he was in debt for the loans he asked for his house. If he would have tooken the time to look in to his financial stability and made a plan that would help him see the possibility of paying off the home he may not have gotten himself into this situation. Some people may argue that loan debts should be forgiven because it is a burden to have. In the article Silence=Debt by Brian Holmes, he states because of the sums that students owe, and because of the long period of their productive lifetime that will be spent paying them back, student debt has been compared to indentured labor. Holmes is for forgiving debt and having free tuition. My opinion differs from his because paying for tuition and paying debt will give the government money that they can use to keep investing in students. Students should pay back the gratitude and faith the government has in them because it will benefit them in the future. Future generations will help stimulate the economy and their will be more retirement money. We all work but I think that labor is more difficult because of low pay and taxes but working with a college degree and paying off debt isnt as hard as the former mentioned. Other counter arguments can be seen in the article Denied? by Jen Mishory and Rory OSullivan, they are pro forgiveness. They believe education is important and that in the long run everything will work out. They say that, buying a house or a car will be difficult because of their debt. But they have good enough jobs to pay their debt and if they spend wisely they can put money aside for an affordable car. It doesnt have to be an expensive luxurious car but a simple car that can go from point A to point B. Graduates can obtain a good job and pay their way through this world like adults. I believe that after college the important thing is paying off their debt and buying a house or car can be put aside. Graduates should not be forgiven because there

Hernandez 5 are ways of planning for the future and the first thing is to eliminate the costs you have and not get more debt. Loans are a crisis in our economy because so much doesnt get paid and the government basically gives that money away. The government invests in college students hoping that they will stimulate funds for future generations. The government has to put up with Medicare and national debt it would be unfair if they forgive student debt because it can have a negative impact on the economy. The positive social benefit of not forgiving debt is that it will not pile pressure on the government because they have enough problems. People should help those that helped them, its only fair after all. If we all put effort, plan and manage our money, and most importantly pay our debt we can avoid going into a major Recession.

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Works Cited The Untouchables. PBS.org. Frontline, WBGH Education Foundation, 22 Jan. 2013. Web. 18 November, 2013. Graff, Gerald. They Say I Say With Readings. New York: W.W. Norton & Company, 2009. Print. Vedder, Richard. Forgive Student Loans? Its the Second-Worst Idea Ever. NationalReview.com. National Review Online, 11 Oct. 2011. Web. 16 November, 2013. White, Martha C. Oregons Pay It Forward Program: Imagine College with No Tuition, No Loans, No Debt. Business.Time.com. Time Inc., 17 Jul. 2013. Web. 16 November, 2013. Holmes, Brian. Silence=Debt: Life Beyond the Education Bubble. BrianHolmes.wordpress.com. n.d. Web. 18 November, 2013. Mishory, Jen, and Rory OSullivan. Denied? The Impact of Student Debt on the Ability to Buy a House. YoungInvincibles.org. n.p., 15 Aug. 2012. Web. 18 November, 2013.