According to American Student Assistance, nearly 20 million Americans attend college annually and 60% of them borrow in order to cover costs. Though the level of need varies greatly, estimates indicate that there is somewhere between $902 billion and $1 trillion in total outstanding student loan debt in the United States today. Such statistics, as well as the many others out there, point to a very troubling and precarious situation for our nation. And what’s more, the figures continue to worsen each year with one of the most troubling statistics being that the number of college drop-outs is on the rise. In fact, nearly 30 percent of college students who took out loans dropped out of school, up from fewer than a quarter of students a decade ago (Source: Education Sector).
In order to stem this mounting problem before it creates a financial mess, there needs to be a significant policy change at the federal level. Specifically, I believe that there needs to be a complete overhaul of the system by which we determine which individuals receive aid. Currently, the criteria that are used to evaluate students is very minimal and does not take into account many factors that would help decipher if a student is likely of repaying the loan. For example, the U.S Department of Education’s office of Federal Student Aid (FAFSA) only requires that a candidate to: have a high school degree, be accepted to a college, have a social security number, and sign FAFSA certification statements. To me, this represents a system that inadequately evaluates students and must become more stringent. I think that a student’s performance in high school, the quality of the university they will be attending, and the student’s planned major should all be considered. Though a radical move, I feel that each of these factors should be considered because each of them is a likely determinant of the student’s future earnings. For example, if a student plans to attend a lower quality university versus an Ivy League school, I think that they should not receive the same level of aid. Though this may seem a little shallow, students from Ivy League schools tend to earn more in their careers than most students so this should not be ignored.
In the end, this change represents a dramatic shift that would greatly limit the number of students that would be able to attend college. I am a believer that everyone should have access to education, but we also cannot afford to continue dishing out federal funds to students that don’t even finish school or pursue careers that will not enable them to pay loans off. As a whole, the United States is in a pretty precarious financial situation given the amount of debt we hold and our level of spending so I think that student loans is one area that can and should be addressed.