What Is Causing the Student-Debt Crisis?

The massive rise of student debt has affected nearly 37 million students in America in a cumulative $1.3 billion of debt and increasing. Many of you reading this already know this for a fact. But hardly anyone truly knows or comprehends what exactly is causing this massive blowout of student debt from only twenty years back in time. The trust is, the state and the federal government have started defunding the higher education programs systematically over the past thirty years to the benefits of big money, banks and private institutions. The cost of getting a higher education has nearly quadrupled since 1981.

In a time when education is increasingly valued in the society, it is in everyone’s best interest to provide the youth the best possible education to overcome their economic burden help with debt. The national policies should be made targeting this into consideration.

However, the ground reality is very different. Students in the STEM (science, technology, engineering, and mathematics) discipline get the same credit risk consideration when loans are awarded as the students from fine arts, or language, as often these jobs do not pay well. Whereas most STEM students are able to find a job right out of the college, get higher salaries and have an increasing and steady income throughout their life. This makes the other students a disproportionate candidate to be able to pay off the student loan, whereas they have the same chance of being awarded who is perfectly capable. This only pushes the bubble further at the risk of popping to 0.

What is the way out?

The disciplines that were introduced in the mid-2000s after the real estate bubble collapsed need to be introduced to student loans as well. Proper vetting and background checks, a capability assessment for repayment is something that every financial institution should instill as a checkpoint before disbursing thousands of dollars to students.