Graduates ready for the next phase?
The Alarming Reality
Over the past 12 years, US student loan debt has quadrupled to a staggering $1.7 trillion. Nearly 44 million Americans carry an average debt of $37,718, and over 11 percent of aggregate student loan debt (pre-COVID) is more than 90 days delinquent.
This past year, the average public university student borrowed over $32,000 to receive a bachelor’s degree. However, only 11 percent of employers believe that a degree prepares students for the workforce. It’s a cruel irony: a $32,000 loan – not counting interest – for a degree that doesn’t prepare you for the career needed to repay the debt.
Tracing the Roots
Federal student loans were first offered in 1958 under the National Defense Education Act (NDEA) to promote specific academic majors—engineering, science, or education—in response to the Soviet Union’s launch of Sputnik. Seven years later, President Johnson’s declaration that higher education was no longer a luxury but a necessity led to the passage of the Higher Education Act of 1965 (HEA), which extended NDEA applicability to all majors.
In 1992, despite an earlier Senate report finding the student loan program riddled with waste, fraud, and abuse, Congress reauthorized HEA, making new, unsubsidized student loans available to any student regardless of financial need. Three years later, Congress authorized the US Treasury to issue student loans directly, and student loan debt increased to $187 billion.
Restoring Financial Literacy In Higher Ed
Fast forward to today, and the current $1.7 trillion debt. By extending and expanding the program and removing the financial cap on borrowers, market forces added to the soaring cost of tuition while increasing pressure for everyone to receive a college degree all without regard for the ultimate success – i.e. a well-paying job – of the effort.
In other words, there’s carte blanche acceptance of debt with no assessment…
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