The student loan crisis taking place in the United States has done nothing but worsen over the course of the past few decades. The severity of the crisis can be seen easily through a variety of statistics. At this point in time, the total amount of money owed by students to their universities is above 1.4 trillion dollars, which exceeds the total United States credit card debt by about 620 billion dollars (National Student Debt Loan System). Student debt is a problem that people have yet to resolve, and might prove to be catastrophic to both the economy of the United States, and to the lives of millions of graduates. 

The beginning of student debt can be traced back to the early 1960s, when President Johnson made higher education a priority of his administration. In a speech from 1965 President Johnson is quoted as saying, “Poverty must not be a bar to learning, and must offer an escape from poverty.” President Johnson decided to subsidize higher education so the government would help pay the tuition of people who did not have the financial ability to pay. This worked well at first but gradually over time more and more students began to apply for loans with no plan  in place to repay those loans. Though students have always had issues paying their tuition, many economists claim that the current day “crisis” did not begin until the recession in 2008. Before the recession many families struggled to pay tuition due to a lack of income but nowadays students usually enter debt because they take on more debt than they are capable of paying. Mark Kantrowitz, a nationally recognized economist who has a focus in financial aid and student loans, performed an observational study between the years 1993 and 2014 to show how student debt has increasingly become a problem for graduates. After adjusting for inflation, Kantrowitz found that the average debt per borrower in the graduating class of 2014 is about $20,000 more than that in 1993 (Kantrowitz). The extra burden of paying off tuition has negatively impacted the lives of these graduates in many ways. 

One of the most obvious negative effects of student debt is that in the years after graduation, these students are giving away a large portion of their paycheck every month to pay off their student loans. Considering that the average starting salary for a college graduate is around $50,000, they cannot afford to allocate a significant percentage of their paycheck to their loans when they could be planning for a better future by investing, saving, or even investing that money in themselves and starting their own business (Baum). According to a survey done by the staff of Student Loan Hero, nearly half of graduates paying off their massive loans have admitted that their loans have prevented them from purchasing everyday items that many would consider a necessity such as a car. Furthermore, a third of these graduates have admitted to spending less money during the holiday season due to their unfortunate financial burden. These loans are clearly restricting the purchases of these graduates, which does not only negatively affect their personal and professional lives, but also the stability and prosperity of the overall economy in the United States. 

 The economy of the United States is strongly driven by consumer spending, which is limited by student debt. The less money graduates have to spend on goods and services, the weaker the economy is. However, some economists such as Jeffrey Dorfman argue the opposite. In his periodical Student Loan Debt is not Hurting the Economy, Dorfman claims that when students borrow money, they do not change the amount of consumer spending since colleges will eventually spend that money on whatever they’d like to buy for the college. Therefore, he believes that student debt does not negatively impact the economy at all. His argument however does appear to have a few key flaws. First, student loans have proven to have a huge impact on the housing market. There is a direct correlation between high outstanding debt from student loans and poor credit ratings. These poor credit ratings are causing banks to put these graduates in a higher risk category when applying for mortgage loans. Since fewer people are buying homes, fewer people are likely to take out mortgage loans which is a huge stream of revenue for many banks. As a result, student loans are hurting both the housing market and the banking industry, which is not mentioned by Dorfman in his argument. Another flaw in Dorfman’s argument concerns the creation of new businesses by college graduates struggling to pay off their debt. According to the 2015 Gallup-Purdue Index, one in five graduates in debt feel that their debt is holding them back from investing in themselves and starting a business (Gallup-Purdue). Even if these students make an attempt to start a business with this debt, it is nearly impossible to be approved for additional loans from a bank. Because of this, the entrepreneurial spirit of these graduates is dampened tremendously, driving most of them to find every day employment until they can repay these stifling loans. New and prosperous businesses obviously help the economy because it increases consumer spending which is also not mentioned by Dorfman in his article.

Another economist who believes that student debt does more good than harm is Sandy Baum, a professor of economics at Skidmore College. Professor Baum argues that students should be inclined to borrow money for college because it leads to more educational and financially rewarding opportunities. Though college does lead to a more educated lifestyle, Professor Baum generalizes the entire population as students by claiming that everyone that feels the need to borrow money, should borrow money. However, for many people this should not be the case. Dr. Douglas A Webber, an economics professor at Temple University, goes in depth about who should be applying for college loans and who should not in his academic journal, Are College Costs Worth It? How Ability, Major, and Debt Affect the Returns to Schooling. In his academic journal Webber focuses on three main factors that should determine whether or not a prospective student should apply for loans. These are desired major, monetary situation, and academic ability which are not always considered by these prospective students. Far too often students who do not consider these factors end up dropping out of college, and struggling to pay their debt that they should not have had in the first place. Professor Mark E. Fincher of Mississippi State University also counters Professor Baum’s claim by discussing the common misconception that students who receive high grades in college are bound to be financially stable in the future. Grades mean nothing in the real world when applying for jobs, so students should not think of their grades as an indication of how much money they will make in the future. Just because a student ended high school with a 4.0 grade point average does not necessarily mean that they should borrow money to attend a university. Borrowing money can be integral to higher education and a financially rewarding career, however, college debt is not something everyone can handle which is what Professor Baum fails to note in her argument in favor of student loans. 

The student debt crisis in the United States has financially damaged the lives of millions upon millions of graduates, however, the more economists know about this ever-expanding student debt crisis, the more they can give advice on how to avoid it. Brianna Mcgurran, an expert author in the fields of money management and personal finance, explains how to avoid an ample amount of student debt in her contemporary article, How to Graduate College Without Surprise Debt. One of the biggest reasons students end college with debt is because they do not fully understand how loans work. Mcgurran wrote this article to inform students on how to pay their loans, when to pay their loans, and what students can do to reduce their loans while they are attending college. She explains that students need to pay closer attention to how much money in grants they are not required to pay back, and how much they need to pay with interest vs. without interest. By knowing the exact amount of money that must be paid, students can then create a monthly budget that will keep their overall expenditures at a reasonable amount. Mcgurran also mentioned the importance of holding a job, not just during the school year but year-round. It is a good idea to allocate money made during the school year and money made during the summer to different things. For example, by committing every dollar made during the school year to lifestyle expenses/entertainment and every dollar made during the summer to paying off tuition, students are often more motivated to work more hours since there is a clear goal in mind. A constant income from working as few as 15 hours per week would easily lighten the amount of debt taken on by a student. Tremendous student debt is far too common in today’s society to be ignored. Instead, students should embrace the fact that they will likely be faced with debt once they graduate. The sooner they realize that debt is imminent, the easier it will be to plan and act accordingly to pay it off in the most reasonable time possible. 

 Although in most cases, student debit is unavoidable, students and their families should discuss the cost of admissions to each of his/her desired university before making a final decision. Each college is required to have a Net Price Calculator (NPC) on their website. This ‘calculator’ is designed to give the family the estimated cost to attend their college based on their financial situation. Additionally, if a student has high test scores and/or a high GPA in high school, that student should seek out universities that offer merit aid. These essentially are scholarships that do not need to be paid back. Information provided from Net Price Calculators, seeking out schools that provide merit aid are tools or methods of gaining the best information to make the best choices hopefully ensuring the least debt possible for graduates.

Students should also not be given all of the blame for this wide spread problem. Not all criticism should be put on the students since loan interest and tuition costs have steadily grown over the past several years. In fact, according to Economix Blog, the price of higher education has increased by almost 550% since 1985, (Economix Blog). Colleges should not look at themselves as a business, but as contributors to a greater society. If colleges were to expand scholarship programs, college would become much more accessible for people who cannot afford to pay tuition. In the long term, allowing for more generous scholarships would positively impact the college in a few ways. First, qualified students who would normally not be able to pay tuition would now be more inclined to attend a university and possibly do research for the university. Second, students who graduate from their university after receiving a large scholarship would be more inclined to give money to the university for more scholarships in the future. 

As the statistics show, the cost of higher education has become a huge financial burden for a growing number of families in the United States. Students are constantly struggling to succeed after graduation due to their loans and there is no sign of this trend slowing down. This also limits the economy since these students have less money in their pocket to spend on goods and services. Though much of the blame is put on the students for accumulating debt, universities should share the blame as the cost of tuition has skyrocketed within the past twenty years. If universities can somehow manage to lower the overall cost of tuition, students would be much more likely to begin and finish college and the overall economy of the United States would reach new heights. 
