The demand for higher education in America is very high; the US obviously ranks high as a top choice location for both undergraduate and postgraduate studies, globally. The number of public and private colleges and universities in the country is another strong indication of this fact. Naturally, it would be expected that tertiary education is, therefore, within easy reach. However, realities that obtains today in the tertiary education sector makes it hard to justify the exorbitant cost of higher education in the US or the struggle to afford a college degree by students from American homes. A lot of students rely on loans to afford higher education in the country. The repayment of these loans, many times, extend long after college is done. Pursuing an MBA seems even more nightmarish for intending applicants, as the top institutions are basically out of reach to candidates with average earnings.
Mary Beal and her colleagues argued in a study that student loan debt in the US threatens the future of the current generation of American workers. Yet many students and professionals aspire for an MBA degree because of the obvious benefits it brings. The challenge which must be overcome then is the intimidating cost of the program. Fortunately, the government financial aid scheme allows students to access financial support – which they are expected to repay over time – to foot their academic bills. Unfortunately, many students are overrun by the crushing burden of huge tuition fees. This has led to a student debt crisis, where a lot of students and graduates are owing, and not paying. As of August 2019, the student loan deficit stands at $1.6 trillion. A really disturbing figure, when you realize that student loan is the second-highest loan category in the US, after mortgage loans. Credit card debts and auto loans are coming after this figure.
An interesting and equally disturbing dimension to the student debt crisis is the socio-economic impact it creates on families; parents and their young college graduates. More times than not, these loans accumulate into heavy debts; debts that affect the quality of life of these families. According to Walsemann et al, the amounts of child-related educational debt were found to be associated with depressive symptoms. Families from minority groups suffer more socio-economic impact. Of course, a number of minorities such as black and Latino households do not have very strong financial standing. Funding a child`s college education is a hard nut to crack for such homes. Why then do we have an essential commodity which is this economically hard to afford?
To correct the exploitative design of the country`s educational financing system, a thorough review is necessary; a review that makes the system more inclusive – to make education accessible to all, and regardless of their ethnic roots. Resultsfrom a study by Ahmed and Kabir also suggest that student debt can increase income inequality and influence the future of current students negatively. Efforts on changing the paradigm must address this socio-economic imbalance.
References
- Mary Beal, Mary O. Borg, and Harriet A. Stranahan (2019), The Onus of Student Debt: Who is Most Impacted by the Rising Cost of Higher Education? International Research Journal of Applied Finance, Vol X, Iss. – 8, Pg. 219-231.
- Board of Governors of the Federal Reserve System (FRB) (2019), Consumer Credit – G.19.
https://www.federalreserve.gov/releases/g19/current/
- Federal Reserve Bank of New York (FRBNY) (2019), Quarterly Report on Household Debt and Credit 2019: Q2.
- Katrina M. Walsemann, Jennifer A. Ailshire, and Caroline Sten Hartnett (2019), The Other Student Debt Crisis: How Borrowing to Pay for a Child’s College Education Relates to Parents’ Mental Health at Midlife. The Journals of Gerontology: Series B, gbz146.
- Ashraf Ahmed and M. Adnan Kabir (2019), Effect of Student Loans on Income Inequality in the United States. Journal of Applied Business and Economics Vol. 21(8) 2019, Pg. 11-24.