The issue of student debt affects so many people worldwide on a day to day basis. As of 2015, student debt is more than $1. 1 trillion dollars (Cook, 2015). This crisis of student debt that has risen overtime has caused major debate and discussion to families, policy experts, and politicians (Cook, 2015). As a result of trying to attain a career, students that are not financially capable of supporting their education and have no choice but to acquire student loans that will in turn become student debt.
The impacts of student debt are seen to affect each individual differently depending on their financial and mental status. Additionally, the type of college each student attends will determine how dramatic their debt will be (Cook, 2015). Students understanding of student debt: One thing that is crucial when taking part in student debt is ones understanding of how it works. A study was done in 2012 that investigated how much knowledge and information college students had on student loans and debt (Cho, Xu, & Kiss, 2015).
This was a study that was a randomized experiment in the Netherlands that portrayed information about loans such as, the loans conditions, interest rates, and repayment periods (Cho, Xu, & Kiss, 2015). The result of this study showed that this information provided did not significantly influence students’ borrowing decisions (Cho, Xu, & Kiss, 2015). Another study was done using a British sample and concluded that student debt levels had increased dramatically between their second and third year of college.
It stated that once students had actually acquired debt, their attitudes or feelings towards debt became more of a reality (Cho, Xu, & Kiss, 2015). These attitudes can be seen as both positive and negative. Compared to this study, is another one that took place in spring of 2008 with 22 focus groups and 114 students based on their experiences in college and with work (Ziskin, Fischer, Torres, Pellicciotti, & PlayerSanders, 2014). The focus of this study was to see working student’s perceptions of paying for college and understanding the connections between financial aid and work.
Part of taking out student’s loans is having to pay them back which is why this study was conducted. This study found that over 80% of students were employed part-time or full-time, over 35% were employed full time, and finally, 20% were working over forty hours a week (Ziskin, Fischer, Torres, Pellicciotti, & PlayerSanders, 2014). The British sample study compared to this study regarding student’s perceptions of paying for college through work shows a correlation. In the British sample study it states how once students actually had an understanding of their debt. hey actually considered it a reality. In the study related to students being employed while in school, we see that over 80% of students are working part-time alone. Both of these studies clearly show that students are taking effective notice to their student debt and what they will eventually owe back. Lastly, another study was done to examine student’s level of knowledge regarding student loans or debt. More specifically, it will measure how much students know about these loans, and the level of debt that can accumulate overtime (lavine, 2013).
Overall this study found that students take on more debt the more time they are in school (Javine, 2013). It also found that students with lower grade point averages have increased levels of student debt (Javine, 2013). This article concluded that financial aid administrators and guidance counselors should use the information attained from the study to create programs to educate and inform all students about debt and student loans (lavine, 2013). Student debt continuing to increase: Student debt is continuing to rise everyday as more and more individuals enter college or graduate school.
As of 2014, the American Student Assistance website stated that the student loan debt in the United States was between $902 billion and $1 trillion (Karas, 2014). It also portrayed that approximately $864 billion is composed of outstanding federal student loan debt. Statistically speaking, twenty million Americans attend college each year and sixty percent take out loans to help pay for their education (Karas, 2014). It is very important that these students that take out loans understand how much loan debt they are racking up and additionally, they must understand its long-term impact (Karas, 2014).
While researching this increase on student debt, I found an article discussing a man who is a teacher in his late sixties with a PH. D. He now owes $2 million in student loans (Gregory, 2014). He was not able to stay employed due to a medical issue he faced and as a result he could not earn enough to pay off all of his student debt. He and his wife would eventually flee the country due to his creditors becoming so aggressive in their attempt to receive payments (Gregory, 2014). Though the example this article provided is an extreme case, it portrays how much student debt has escalated in the United States overall.
This article goes on to discuss how student debt in the United States has exceeded the nation’s credit card debt as of March 2012 (Gregory, 2014). The correlations that can be seen in both of these articles regarding student debt show how critical this rising amount is becoming. Many American’s dream of having a financially successful life by earning a college degree, but to attain this, one must utilize the financial assistance of student loans (Razaki, Koprowski, & Lindberg, 2014).
As of 2011, “the Federal Student Aid (FSA) Law that is administered by the U. S. Department of Education (DOE), manages more than $134 billion in annually disbursed aid and a loan portfolio valued more than $812 billion” (Razaki, Koprowski, & Lindberg, 2014) in 2010, annual federal loans had increased from $105 billion to $129 billion in 2012, that is a 23% increase (Razaki, Koprowski, & Lindberg, 2014). The fact that in just two years the value of student debt rose that much shows the steady accumulation that is taking place.
You can see the relation in all three articles and how each one proves that this rising numeric value in student debt is just going to continue to increase. Student debt and its effects on employment: Many individuals take on the responsibility of student loans that will eventually become student debt in order to receive a college education. In an article discussing the short term effect of educational debt on job decisions, it stated that debt amount could potentially affect initial wage and wage growth through two different mechanisms (Minicozzi, 2005).
Either those with high debt may be more willing to substitute other job amenities for an increased wage, or debt may lead to higher effective borrowing interest rates (Minicozzi, 2005). Compared to this data, I found in a different article that outstanding debt should have no effect on individuals’ future choices. It affects only an income but does not affect prices or interest rates (Zhang & Lei, 2013). This article also stated that for both public and private college students, debt had no effect on career choices one to two years after obtaining a bachelor’s degree (Zhang & Lei, 2013).
This shows how student debt had no actual impact on students finding a career or employment, but does affect their level of income. An experiment was done to identify the correlated effects of student debt on employment outcomes. They found that debt did cause graduates to choose substantially higher-salary jobs and they also found evidence of debt affecting students’ academic decisions during college (Rothstein & Rouse, 2010). They also stated that some recent graduates may attempt to repay loans quickly (Rothstein & Rouse, 2010).
All of these articles correspond with one another in the fact that student debt does not have a direct effect on career choices but does initially affect ones income. Student debt effects on mental health: Student debt can have a major impact on one’s overall mental health. Though these loans help individuals financially through their education, they in turn lead to stress and worries related to repayment (Walsemann, Gee, & Gentile 2015). An article regarding student debt and mental health effects found that student loans were associated with poorer psychological unctioning and parental wealth (Lim, Heckman, Letkiewicz, & Montalto, 2014). Compared with this information, it was stated in a different article that seeking financial help in college can be a hassle for some students. Those students that are not receiving financial help, are generally more stressed regarding the issue of student debt because they have no one to educate them on repayment processes or just about student debt or loans in general.
Given the financial stress students face, these results suggest that increasing students’ knowledge on student debt may be an effective way to improve students overall wellbeing and mental health (Lim, Heckman, Letkiewicz, & Montalto, 2014). Another thing to keep in mind when researching the mental health effects from student debt is that practitioners have had to deal with clients who have financial problems that impact their cognitive, emotional, and relational well-being (Archuleta, Dale, & Spann, 2013). This shows how severely student debt is affecting individuals.
This article also portrayed the cost of tuition fees including room and board averaging around $17, 131 for in-state public institutions and $28,500 for private colleges and universities (Archuleta, Dale, & Spann, 2013). Between all three articles you can see how the high cost of a college education truly impacts ones overall well-being and mental health. Student debt effects overall: Student debt effects one mentally and financially. Many young adults will rely on their parents’ for financial support or resources regarding paying back student loans (Houle, 2014).
A study found that parents’ income and education were linked to young adults’ student loan debt (Houle, 2014). Obviously those individuals with parents’ whose income is high, have a lower risk for obtaining student debt than those with parents’ with who’s income is middle-class or lower. Compared with this study, it is also important to acknowledge the financial effects student debt has made. In 2013, more than ten percent of all borrowers from student loans owed more than $50,000 and roughly five percent owed more than $100,000 (Cook, 2015).
Those numbers lone show how high the amount of borrowed money can get at an individual level and how it totals a staggeringly high amount of student debt all together. Lastly, it’s important to keep in mind how individuals will be using this borrowed money they receive. Many policies assume that students will be capable of covering all of their living costs with student loans, parental financial contributions, and some form of employment (Christie, Munro, & Rettig, 2001). Yet in reality this is not the case. Some students do not have parental contributions or employment (Chirstine, Munro, & Rettig, 2001).
Overall, student debt has impacted so many individuals worldwide. It has and will continue to rise as more and more people make the choice to attend college and borrow money to earn a degree. Student debt has provoked many financially and mentally overall. This large amount of debt is causing major societal issues for many. Without student loans, some would be unable to attend college due to financial stability. The articles portrayed throughout this paper show how negatively student debt can impact someone’s life.
