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Student Debt – Future At Stake

Loans people take out in order to pursue their higher education, with hopes of having a better future sometimes becomes the very reason for many from moving forward in life. With an outstanding amount of $1.2 trillion, student loans are now the 2nd biggest consumer loan crisis after mortgage and higher than credit card debt. It is estimated that students graduating from college after spring would be the most indebted class of graduates. A government Data analysis has calculated that this class of graduates is indebted with almost $33,000 which is higher than any of the previous graduating students. However many of students invest in their education through these loans in hopes of getting a job that pays them enough to repay them. But once they step into job market, a small number of graduates get jobs which pay them enough to repay their loans.

Student Debt – Future At Stake

With interests on loans commending to an uncontrollable level, leading to financial, emotional and economical stress thus affecting every part of their lives.

  • Problems caused by student indebtedness all over the world:

A number of Students all over the world are suffering from the crippling effects of debt. Although student loans are meant to make higher education affordable to those who do not have the means to afford it otherwise, with the increase in college fees and unavailability of jobs this blessing is slowly affecting their lives in distressing ways. If we take a look at global statistics, it gets quite clear that the shared recession around the world is affecting every country’s economy and employment rate, making it even harder for students to pay off their loans.

Analyzing the conditions and effects of debt in some of the major countries, we realize that student debt is a global issue. According to a research, almost 85 % of students in England will never be able to repay their student loans. The research indicates that most of the students will then be burdened under heavy loans for a very long period, making it hard for them to go forward with any future plans. Canadian student debt has been estimated tofloat around a $20,000 range in average. However, The Canadian Federation of Students has calculated it to be at $27,000, this number is close to the $26,300 most students expected to be indebted with after graduation.

Statistics from these three major countries show how the loan bubble has engulfed global economy. These growing debt statistics show how graduates and post graduates are struggling with their lives and are not able to pay off their hefty loans.

  • Graduate future flow of earnings not covering the costs of doing degree:

 After taking huge amounts in loan to pay for their college and/or university fees, students, when they get jobs that are either underpaid or are not in their field of interest. Mostly their gross monthly income is not sufficient enough to meet the monthly debt requirements. The ration between their earnings and monthly loan repayments is always uneven leading to financial hardships. The cost they paid for their degree usually exceeds to the amount of money they are later indebted with. Students who earlier thought their college or university would be the best investment of their life are left dubious about making this basic decision.

  • Student loan systems in America and elsewhere are badly designed:

 These alarming statistics prove how the student loan programs, which are otherwise devised in order to provide relief to students, are not properly strategized at all. Had there been proper planning done with due consideration given to every country’s economic and financial conditions, these programs have really helped students rather than putting their futures at stake. Usually designed and being considered by students with the expectation that their future pay would cover up for the amount of loan they have to pay. This idea turns into a myth when the students are left with minimum job opportunities. Students around the world have been witnessed protesting against their respective government’s poor student loan repayment policies.

With extended period of unemployment, governments should revise their laws and policies related to bankruptcy and changing the nature of repayments through making the repayments of student loans applicable only when an individual reaches a particular point.

Final Word:

Student debt issues are making lives of future graduates uneasy resulting in less productivity in the services sector. Although student loans were just issued after 1840, but since the past couple of years with recession taking over and when growing interest rates provoked serious economic issues. And this is not just the case with one country, in some way or other the debt crises, specifically student debt is affecting global economy.

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