Impact of student loan debt
The financial crisis happened because banks were able to create too much money, too quickly, and used it to make loans without concerning applicants’ abilities to repay. Student loan debt is a epitome of this situation.
The number of student loan borrowers grew almost 38 percent from the number in 2008, according to data from one of the three major American credit bureaus, Experian. The debt among American students hits about $1.2 trillion, which increases 84 percent from 2008.
The terrifying fact is since not many people can repay the onerous student loan with their relatively low wages, student loan debt does not only burden young people and causes more negative impacts. A woman from Watsonville, Calif failed to pay her student loan eight years ago, as a result, her debt has risen to $126,000.
Similar like the United State, student loan repayment begins almost immediately after Canadian students’ graduation. The inability to repay can cause tension, desperation and insomnia of loan borrowers. On the other hand, as the “Impact of Debt” shows, with the pressure of student loan debt, new graduates reduce the opportunities to pursue desired careers and the ability of serving in charitable organizations or lower paying jobs.
The student loan debt almost creates a vicious circle of poverty. Students have to borrow money because of their parents’ inadequate savings and unpaid student loans for their undergraduate degrees. As the woman from Watsonville, Calif said: “I incurred this debt to improve my life, but the debt has become my undoing.”
The process caused the financial crisis: banks create too much money => make loans => debts become unpayable => bankrupt => financial crisis
Reference
“美国学生贷款人数达四千万 总额达1.2万亿美元.” 中国新闻网. 中国新闻网, 11 Sept. 2014. Web. 14 Sept. 2014. http://www.chinanews.com/gj/2014/09-11/6580807.shtml
Olson, Elizabeth. “Student Loan Debt Burdens More Than Just Young People.” The New York Times. The New York Times, 12 Sept. 2014. Web. 14 Sept. 2014. http://www.nytimes.com/2014/09/13/business/student-loan-debt-burdens-more-than-just-young-people.html?ref=economy
“Impacts of Debt – CFS-FCEE.” CFSFCEE. N.p., n.d. Web. 14 Sept. 2014. http://cfs-fcee.ca/the-issues/student-debt/impacts-of-debt/
This is a very interesting post as it may be relatable to some students here at UBC. It is relatable to me as I have a friend who is facing a lot of stress regarding student loans, and is very strict on how much she can spend on living expenses. The ending of your post with Calif’s quote shows such irony on how students loans are supposedly used for things like paying University in order to get a better job, but it turns out to be the opposite which is getting any kind of job possible in order to pay back debts.