College Debt in the United States

The tuition at Private Universities is decided by the university itself, and no legal price restrictions exist. This means that the sky’s the limit when it comes to tuition prices.

Recently, a few different methods of managing expenses have grown in popularity. Financial aid is a common resource that most universities offer, allowing students to attend college with a tuition more proportional to their income. According to The Education Data Initiative, 86% of college students in America benefit from some form of financial aid.

“Of students receiving aid, our average scholarship is $50,000, and to put things in perspective our tuition is almost $60,000.” said Mike Runiewicz, assistant vice provost and director of student financial services at Washington University.

On average, Wash U students that receive financial aid are granted almost full tuition. With a contribution that sizable, the opportunity for a private education is much more in reach for its applicants. 

“At Wash U we would never ask for any student to take more than $5,500 in student loans,” Runiewicz said. “And for any student who receives a Federal Pell grant or comes from a family of $75,000 or less in income, we wouldn’t provide loans for that student at all.”

Financial aid programs at universities may be a gamechanger for some, but they can also be opportunities for disaster. “I heard many stories of students who were given financial aid last year but not this year, so now they either have to take a gap year or take out tremendous amounts of student loans,” said Galinksy. 

For students whose financial situation change during their time in college, it is very likely that they will lose their qualification for aid. In that case, their only options are paying in full, or taking out student loans. “It is a very common narrative that many people are left abandoned with tremendous amounts of debt that they cannot manage.” Galinksy said. 

According to a 2019 poll conducted by the opinion and market research company (SSRS), almost 20% of the nation’s 43 million federal student loan borrowers are in default—meaning they have gone at least 270 days without a payment—and remain thousands behind on their payments.

A fifth of student debtors are drowning in their own bills, and with total college expenses averaging at over 100 grand, post college programs can become the largest monthly expense. 

Despite this, many different payment plans exist to offset the enormous cost of an advanced graduate degree. “Currently I am in the Student Loans Forgiveness Program (PSLF), which means after 20 years of paying off my student debt, my outstanding balance will be forgiven.” said Barry Gorlitsky, nephrologist at the University of South Carolina.

In the US, there are currently 41.2 million users of the PSLF. But is a program this forgiving too good to be true? 

“So far, over 90,000 people have applied for forgiveness, but just 845 applications have been approved,” Forbes said. “It’s hard not to think of a program with a 99% rejection rate as an absolute failure.”

With its extremely competitive pool of applicants, this dream-come-true program may be too unrealistic. To even be qualified for the program, one must work a full time job. For many, being a full time parent or caregiver doesn’t allow one to access such a payment plan. And for the slim number of accepted applicants, the program might not be so forgiving when circumstances, professions, or living situations change. 

Another big factor for these payment plans is the current pandemic. “[PSLF] paused interest during this past year which was very helpful, and I am very grateful for it,” said Gorlistsky. “But I risked my life during COVID…and I think that [PSLF] could do a lot more for borrowers than they currently do.” Although COVID changed the circumstances for many, payment plans did not always change with them.

Despite the numerous programs and aid services that exist, it is actually rare to benefit from them due to the fact that if specific requirements are not met, acceptance is impossible. The majority of young Americans see college education as the only avenue for success and future happiness, but many continue to pay the price years later. 

In all, Americans owe a total of 1.71 trillion dollars in federal and private student debt combined. This massive quantity affects both the borrower and society in many unforeseen ways. “Economic disparity has led those with advanced degrees, such as medical doctors and legal professionals, to avoid practicing in low-income areas,” said the Education Data initiative. 

This widens the socioeconomic divide because lower-income communities lose access to resources and knowledge provided by professionals—such as healthcare. Many post-graduates cannot afford to lower their rates or donate time to those in need because they are forced to make payments on their student debt. 

In all, college debt is an issue in our country, and it isn’t getting solved at a rate fast enough. Individuals are struggling decades later in their adult lives because our nation does not provide enough accessible resources to all who are in need. Inflation is causing prices of universities to increase disproportionately to incomes across the nation. 

Tuition aid and payment plans exist, but as seen, are extremely selective and not available to everyone in need. In order to see a change within our country, the universities and government authorities must provide a wider range of manageable aid and payment plans that allow everyone access to further improve this detrimental outcome of college debt rates in the United States.