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If You Can’t Afford College, Do You Borrow or Do Without?

A couple of decades ago, a rock band had a collection of songs with a name something like “Crisis, What Crisis?” This question is currently being debated in connection with the subject of student loans. Many observers as well as people in the finance industry are of the firm opinion that there is a crisis because millions of young people are in debt due to large sums borrowed to finance a university education.

The numbers certainly don’t lie. The total amount owed by all students in the UK is above the £100 billion mark so there is the problem of massive amounts of money owed. In the U.S., the number is now being talked about with a “trillion” attached. Even large numbers such as this wouldn’t necessarily constitute a crisis if the indebted individuals had sufficient income to make regular payments. Eventually, the loans would be repaid with interest and everyone would be satisfied, right?

Wait a Minute

Many individuals who connect “crisis” with the student loan process believe that the problem lies in the lack of sufficient salaries and wages paid to graduates who must begin to make loan payments. This line of thinking states that having a university education doesn’t ensure higher pay so borrowing to pay for that education is a self-defeating act. For those who have graduated and are faced with thousands in loan debt and don’t have adequate income, the situation is stressful at best.

It might be good to gain some perspective on this issue by turning back the clock a bit by one year, actually. In January 2016, Mark Kantrowitz wrote about the “student debt crisis” and noted that “most people focus on the rapid growth in outstanding debt.” He mentioned the $1 trillion mark in the U.S., a milestone reached in 2012. But he also wrote that marks such as this only tell part of the story.

If you take some time to read about this interesting and distressing subject, you’ll find that there are a few elements in the background that have contributed to the problem. One has to do with the lack of other sources for funds to cover the cost of LSAT prep materials. Grants, scholarships, and other financial support are either much harder to obtain or not available as they were just a few years ago.

Whose Money?

As government agencies in the U.S. and the U.K. back away from providing this support, the financial burden falls to families who don’t have the income to pay for college educations for their children. As Kantrowitz noted, “Since family income has been flat since 2000, students must either borrow more to pay for college or enrol in lower-cost colleges.”

There is one other alternative. If the family and the student don’t want to borrow or choose a lower-cost school, they might have to forgo a university education altogether. This might be an interesting idea to look into: What impact does no college education have on the individual and by extension on the nation and the economy?

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