Neema Naeemi

ENGL 219
December 4, 2015
Ms. Amanda

National Student Loan Debt Crisis

The United States is plagued by debt, while some become burdened by their own poor
habits; more are forced into this situation in order to achieve their higher purpose. In this briefing
I will be revealing the truth about student loan debt and how detrimental it can be towards the
lives of young Americans. As well as discussing a future where the issue is not fixed, reasons
why we have not already fixed the issue, and three possible solutions.

Current Situation
In the United States there is 1.2 trillion dollars of student loan debt, thats with 40 million
borrowers so on average it becomes $29,000 per person. This is the National Debt of all
undergraduate and graduate student loans. This is a crisis that is ruining Americans lives, I am
reaching out to whoever will hear the cries of 40 million current Americans and the millions that
will inevitably follow (U.S. Department of Education). Our purpose is to show you the benefits
of a country and its people when they are not burdened with a lifetime of debt. 2 years ago a bill
was passed doubled the already fixed interest rates on student loans. This caused nationwide
protest and rather than correct the issue it was left be. Many groups have fought to lower rates
and make it possible for students, but not much has changed. There has been lots of debate in the
2016 elections for this issue so my mission is to shed more light on the matter and make more
people aware.

Summary of the Facts and Situation

Looking at where the 1.2 trillion is realistically spread out 5% of the 40 million people
owe $400,000 plus, in the middle people owe $100,000 to $300,000 and the rest owe less than
$100,000. Now, lets consider the rates each student is paying. For the sake of argument let's
assume each student is getting 2% to 6% at a fixed rate on subsidized and special loans, which
will cover about half, then 6% - 12% on private loans (U.S. Department of Education). And
assuming it takes 5 years to find a job and get settled in, settled enough to be making progressive
payments towards your debt. By that point you are paying a quarter of total amount in just
interest.
More specifically, looking at the rate of students who are hired after their undergraduate
vs. students with a graduate degree. In 2014, there was roughly 17% unemployment for
undergraduate graduates. 60% were employed and 23% continuing education (US News.
U.S.News & World Report). That 17% is usually from graduates who have really competitive
degrees, and should be studying for their graduate degree but maybe cannot because of the price.
But when you look at how low the unemployment rate is for graduate students youll see how
important it is. The U.S. has an excellent and unique situation, the economy can support a large
about of middle class citizens but when the middle class cannot spend for the first 5 years of their
working lives. Then we have a problem. There is an unspoken pressure that undergraduate

students must receive a graduate degree to get a job or reach their desired level of success and a
point where they are in a position to repay loans. The job market needs professionals in their
field and sadly in this country a bachelors degree isnt enough. Having said that if one considers
the cost of graduate school, it far surpasses the cost of undergraduate and there are almost no
opportunities for scholarships, and not a single federal grant.
What politicians don't see is what happens after all the scholarships, grants, and
subsidized loans are tapped out, there is still more than half that needs to be paid for. At that
point people are knocking at the banks and private lenders who charge 6% - 12% interest. Each
year as the programs become more selective so do the scholarships. Then students may have to
reach out to different lenders. The irony of all this is that private lenders are mostly major banks
or groups who receive their money from major banks. These banks are receiving their money
from the Federal Reserve for 0.01% interest, they charge about 1% - 3% when lending to the
groups. Then they both turn around and charge 8% - 12% interests rates on students requesting
loans. They claim that it is because the students do not have reliable credit and because they
know the students have limited options.

Importance of the Situation

After two years the issue of reducing interest rates on private loans is finally being
brought back up to light in politicians who are running for the election in 2016. When the bill for
doubling the subsidized Stafford loans interest rates from 3.4% to 6.8% which accounts for a
quarter of all direct federal borrowing was passed in 2013, massive protests evolved. Because
subsidized loans are of the main sources of lending this caused much concern. The issue lost
attention before any action was taken; yet the graduates and currents students are still suffering.
The students were arguing that they already couldnt afford coving all of the interests charges.
Saying how much this issue would ruin them, and how much they are struggling. Their struggle
will never be met with empathy because the debt crises doesnt extend to the politicians and
rulers of this country, their education was met at a reasonable price at a better and more
prosperous time in the country.
This affects the students of the middle and lower class of this generation because they
depend on subsidized loans, which give them the opportunity to pay back their loans when they
have achieved their undergraduate degrees. But if the interest rate is doubled then it will take
them longer than they had planned for. Which would only add time to theyre being able to pay
back their debt. People dont seem to understand what it means to be in a debt that is growing
faster than it can be paid off. And the implications it puts on someones credit opportunities.
There are people who are unable to get the financing for a home or a car.
This issue needs just as much attention as the rest of the education in country. Everything
this country does for the children in schools is so that when they grow up they can attend a
respected university and study something that will give them the tools to live a good life. As
times are changing Ive noticed that die in this generation. People believe the cause of students
dropping out is because of their environment or where they were brought up, its not. Children
can see the world and have empathy for how hard their parents are working to give them what
they have. They know the price of college, they know what they have to give up in order to have
this dream. If you tell a child that if they do well in school while theyre young, enough to go to
a great college that theyre entire education would be paid for. They would pour their heart into

their studies. But that doesnt happen. The rest of the world has figured out a system, it is either
one or the other. But currently we have neither.
Future of the Students
This is needless to say but without any actions being taken we will be raising a generation
of debtors who will not have the means to pay off what they thought would be the ticket to their
financial freedom. Student loan debt, although we would like to see it as something different than
mortgage, credit card, or other loan debt it is the same. It will carry with you until you literally
die. It will stay with you after bankruptcy, and until your children go to school. At that point you
will plead to them to find a different way, but there is none. Imagine working for so long just so
you can begin your life but then having to put it on hold because you cannot receive a mortgage
or a car. Suppose a student just graduated from graduate school and is making $80,000 a year. I
will use the example of a very competitive degree, ones that are unlikely to find jobs after just a
undergraduate degree, such as fine arts, humanities, and education. After roughly 6-8 years of
school and working off subsidized loans during your degree program, lets assume the graduate
has collected minimal debt from undergraduate but the average debt from graduate. So $70,000
plus $150,000. Then every year after taxes they are making $60,000, putting aside $30,000 for
living expenses. The graduate will have in the best case scenario $30,000 a year to pay back
loans. But after fighting the interest rates they are really paying 1/3 towards the principle. For 1015 years they are paying back loans and are fighting the banks for more money to refinance or
even to buy a house or car. But no bank wants to give money to someone with that much debt.
This is the life of someone who only wanted to live comfortably and support themselves and
maybe a family.
The land of the free will eventually turn into the land of the enslaved. If in the past
decade student loan debt has quadrupled, the Bloomberg Post predicts that by 2025 the already
high debt will triple. Being as the economy is resting on a large pile of debt and that the only fix
is how the generations to come choose to recover us from this debt it is probably best to give
them the tools and motivation to want to help the economy by solving their issues.
This faade will only last another decade. If action isnt dont the generation that we
aloud become debtors will be ruling the country and when they are working effortlessly to fix the
wrongs we are committing now the generations to come will have nothing left give. As
politicians who want to enact great changes during your time you know and must understand
what immense efforts it takes to clean up someone elses mess. History doesnt always have to
repeat itself, stand with us and heed our recommendations.

Recommendations 1. My first recommendation is to give students the opportunity to negotiate their loans with
private lenders and work out realistic payment plans. If on average the creditors reduced
the debt by 5% - 20%, or took the interest payments made on the loan and put all of it to
the principle this would cut down national debt by 100 billion 300 billion (U.S.
Department of Education). Lets consider the loss the lenders and banks vs. how this
could motivate graduates to pay back theyre debt. The argument is how fast do they
want to see their money come realistically. With all the money they have made from
interests, they would be fools not to take advantage of an opportunity to secure theyre
future investments

2. In the 1900s there were an abundance of opportunities for students to receive loan
forgiveness for aiding in war relief, community support, and groups that aid in foreign
countries. As time passed less and less of these opportunities were taken and now people
dont even know about this option. These opportunities are limited now and often never
used, when the majority of the graduates have obligations such as families or just not
being able to work for little or nothing while supporting themselves. I recommend that
we show more people what they can do through university advisement and political
awareness to encourage lenders to do something that could benefit the world. This would
give more opportunities for graduates to get loan forgiveness for their services in places
of need.
3. There are some politicians who want to relinquish all student loan debt entirely, which is
a radical and maybe dangerous idea, but one that is definitely interesting and worth
exploring. There is currently an online petition with 300,000 signatures. If it receives
enough recognition and the president approves we could have an immediate stimulus on
the economy. Imagine if millions of students could suddenly have hundreds or thousands
of dollars in their pockets every month. Rather than funneling it back into the national
debt this money would drastically increase spending and encouraging business to hire.
We could live in a world full of motivated innovators and entrepreneurs who want
nothing more than to give back to the ones who freed them ("The Student Debt Crisis
Solution.").

Conclusion and Summary

Every country in the world except the United States offers free education until the
graduate level. That gives every child the opportunity to study what they want and to apply
where they want not having to worry about being able to afford it, then they go into the working
world with nothing but ambition. In the United States students do not have that luxury. Applying
for college is the most painful experience to many, not because they may not be accepted, but
because they may have worked so hard their entire childhood to attend the school of their dreams
just to find out that they will not be getting the support they needed to attend. Times are rough,
there is no arguing that but if we have an opportunity to change the way the next generation of
students goes to college! Why shoot ourselves in the foot so early.
References
U.S. Department of Education, National Center for Education Statistics. (2015). The Condition
of Education 2015 (NCES 2015-144), Employment Rates and Unemployment Rates by
Educational Attainment .
US News. U.S.News & World Report, Tue. 17 Nov. 2015.
"The Student Debt Crisis Solution." POLITICO Magazine. Web. 17 Nov. 2015.