“Hence I have no mercy or compassion in me for a society that will crush people, and then penalize them for not being able to stand up under the weight.”
- Malcolm X
USA, where concrete jungles tower over the horizon, where dreams are just on the spur of life. The states used to be such a grand visage for opportunities, the exact place to be to change your life. But bit by bit, year by year, what was once hailed as the greatest, slowly becomes a shell of its past self. If anything however, American’s have only their education to be proud of as they house many of the world’s top universities. Harvard, Yale, Brown, they’re all household names in academia which stand on top. Yet even so, rising tuition costs coupled with the privatization of higher education has made loans the only way to afford it. A growing number of Americans are finding themselves working tirelessly, teetering between living costs and student loan debt as a bachelor’s becomes the bare minimum.
Who owes how much?
As of 2024, Australia’s GDP ranks 14th in the world with a cool $1.79 trillion according to data from the IMF. A bustling country with a growing young population, it’s a prime example of a developed country. Though it may seem out of place to talk about Australia here, it serves as a great point of reference. The amount of student debt owed in America nearly surpasses this number, sitting nicely at $1.75 trillion. The average American owes $28,950 of debt when divided equally, and in most cases it truly is the only way one can earn a higher education and a degree. 61% of college students graduate with debt according to the National Center for Education Statistics. Though these loans do provide a means for those with lower income, the act of burdening people when all they want is to just be able to get a job feels rather deliberate.
A key aspect of this student loan crisis is understanding how the payments themselves work. Generally, there are two methods granted by the US government; the first is a time based repayment plan that is similar to paying off installments on the loan. Borrowers pay a significantly higher amount than the interest every month, and as such it ensures that the loans will be fully paid off within the time frame provided. But for more than 40% of people, they can’t afford to pay this premium since their monthly wages can’t cover it (Wall Street Journal, 2023). They then resort to income based plans that can lower the monthly payments by over 80% at times. The problem with these reduced plans is that it rarely covers the cost of the interest, let alone bite into the principal loan itself. As time goes on, loans of low-income borrowers can start to balloon with interest, leaving approximately 39% of student loans higher than they were before (Pew Charitable Trusts, 2021). Imagine toiling away for 10, 15, maybe even 20 years, making sure to pay your loans every month without failure, and later finding out you owe thousands of dollars more.
The skyrocketing number of student loans is attributed to funding cuts done by the U.S government after the 2008 Global Financial Crisis as they try to recuperate their losses. Operating costs for public colleges provided by the State have fallen from 74% in 1986-1987 to just 46% in 2015, causing institutions to raise tuition in order to cover costs. Furthermore, after multiple reforms through the Reagan-Clinton era in the 80s and 90s, a majority of loans were no longer subsidized and were beginning to be borderline predatory (Carlson, 2020).
Defaults and Underlying Problems
Biden’s plans for reforming this student loan system became his leading campaign throughout his election and current time in office, vowing to once and for all clear people of debts they are unable to pay. After pausing payments during the pandemic to ease off burden, his Student Debt Relief plan that was recently reinstated vows to forgive up to $20,000 in debt. But the challenge still lies in its shortcomings. For non-public workers under an income driven plan, they are only eligible for forgiveness if they have been paying for over 20 years, and they have never missed a payment at all. One misinput of data, or forgetting to renew your annual income recertification can lead to the debt shackling you for the rest of your life.
