The Next Model of Student Loans

from Medium

The inflation levels of student loans can be crippling to social mobility, just ask young people who graduate with $50,000 or more in student loan debt. While job uncertainty increases with rising automation, what about students staring down the barrel of six-digit loan obligations yet to come?

The student debt crisis could have long-term impacts on the U.S. economy. Yet we rarely think about alternatives to the status-quo of dangerous inflation.

What happens when student debt actually lowers the fertility rate? What happens to consumerism and an inverted population pyramid and a labor market that can no longer provide for the services society needs? Welcome to the economic press of the future.

More here.

52 Responses to The Next Model of Student Loans

  1. Josh Shupper February 19, 2019 at 7:24 pm #

    Student Loans is one of those things where someone can never seem to get out of easily. After having fun for four years at college while graduating and getting a degree, interest is accumulating very quickly on any and all loans. Next thing you know you have over $50,000 in student debt. For some students, it is over $100,000 in debt. Instead of enjoying life, people are stuck to paying off student loans for a very long time, potentially the rest of their life. However, I believe that the idea proposed in the article is something that will work for everyone and benefit them. Instead of paying off student debt that constantly accumulates interest, a student would pay a portion of their income from their job to pay off as debt. It makes things more efficient and does not create as much as stress for college graduates than paying off debt. As a college kid, I will eventually find out what it is like to have to pay off student loans. The problem with the amount of student loans is that it increases every single year because schools tend to charge a couple more thousand dollars each year due to an increase in demand for education at school. At Seton Hall for example, the size of the graduating classes are getting bigger and bigger every single year. It keeps driving the costs to go to school so much higher because there are more students coming in year after year. I know that I do not want to be stuck in a situation like this. I would personally pay a certain portion of my income rather than being stuck in years of debt. The one question I would have is how students would pay. Would it be in a portion of each check that they make or supposedly one larger payment based on their yearly income? Not only are people saving extra money from coming out of their pockets, but they are also saving for what they could do with their extra money in the future. I think most people would want to enjoy their extra money on a nice vacation to somewhere warm and tropical rather than having to work 40 hour weeks and make barely enough money to cover student loans along with other things including rent and utilities bills. Less sacrifices would have to be made, and people can truly enjoy life. Hopefully, the income sharing agreements proposed by Purdue are adopted all over the country by colleges, especially the really expensive schools throughout the United States. This proposed idea is something that everyone will benefit from based on financial aspects.

  2. Abdulrafay Amir February 19, 2019 at 10:22 pm #

    Student loans are a system that has crippled students coming out of college. It is clear that the amount that students come out with is growing more and more each year which is very alarming. I myself have noted the amount of money that I will have to pay out after finishing 4 years of college which is alarming no matter how big or small the amount. The goal was to have a successful high school career to set me up for college however I quickly learned that this would only get me so far. FAFSA has screwed me over more times than I can imagine because this system clearly fails to consider the true struggle that many middle-class families have to go through regardless of what their salaries “show”. I believe that the system most definitely needs to be tweaked and changed in major ways to help students that are forced to take out multiple loans that add up to enormous amounts. Unless the student is able to network and set themselves up properly, it is extremely difficult to find a job that they can use to pay off their loans which leads to many graduating students having to pay of these loans over the course of 15+ years.
    This system has trapped so many young adults and I myself have been scrambling to get part-time jobs and find unique ways to gain money here and there to somehow lighten the load of debt that I am looking at after a few years. I believe that many students should enjoy their 4 years of college but what a lot of students fail to do is try and tackle their problems during college instead of worrying about all their debt after college which can be so overwhelming to an individual. Being able to properly see how much money they can get rid of currently will really set up students for experience in how to pay off their loans and leaves them with a better goal to achieve. If a student is stuck paying off their debts for most of their adult life, they will enter middle age miserable and regretful that they couldn’t enjoy life while they were younger and had time. It is time for us to put a stop to this epidemic.

  3. Croix R February 20, 2019 at 3:56 pm #

    I do think that it is an interesting idea to rethink the student loan dilemma. However, I feel like the author only takes a one-sided approach to viewing this new idea. Yes, the ISA plan will help students who fail to find jobs or find lower paying jobs, but students who succeed will be hurt. Students who put in the effort, do internships during their college time and find good jobs should not be penalized for succeeding. I did some more research and found that, at least at Purdue, they limit the risk to 2.5 times your initial funding. The problem is that 2.5 times is a lot of money when you are talking about student loans. It seems like it ends up being that those who choose good majors and find good careers, end up paying for those in less practical majors or put in less effort. In my opinion the ISA model is not a good idea overall.

    It is a shame to me that succeeding in the United States almost requires you to have a college education. But that is just the way that it is. If you do it right like most college students and get your degree, then you are almost guaranteed a job for life. I do think that the tuition rates for college have gotten way out of hand. It is really hard to see an institution validate charging so much money. My idea going in to college was to go to a community college before transferring to a 4-year school. I think that I got a very good education at my community college and I saved a ton of money. I left my community college with 0 debt for my first 2 years. I think that is pretty great. I also received a scholarship from the school I transferred to because I was transferring and my GPA. In my opinion more students leaving high school should view community college as a viable option. For me and many others that I know at age 18 you really have no idea what you want to do. Since this is the case, going to a 2-year school can really help you find what you want to do and save a lot of money in the process. If you want to change majors or programs there is almost no consequence.

    • Ria Bagga February 22, 2019 at 5:18 pm #

      After reading the article I held the same stance, that ISAs just don’t appear to be a viable option. It seems like it could be a big risk and paying 10 percent of your income for a long period of time when that money should contribute to living expenses, taxes, mortgages, and starting a family. I truly don’t see the issue in graduating from a community college. I am privileged myself so maybe I don’t understand what it’s like not having the option of graduating from a University. Student loan debt is certainly an issue for a majority of Americans, but people often act like Universities just charge whatever they want. College tuition is increasing with the progression of our society. Education is valued higher than ever, and therefore, increasing in demand. It is simple economics, and along with the increase in demand will come the jacked up prices. Something my economics professor always stated was how it seems like we pay for college, but college will also pay us.
      Along with the increasing demand for tuition is the decreasing need for jobs that can be replaced with technology. With the reduction of these jobs are the creation of jobs requiring higher expertise in IT, which is why IT is projected one of the largest growths in the future. People will always curse our presidents for their jobs going away, but you really can’t blame the government or our presidents for progression. The blame for losing jobs is just a narrow minded resentment, and it really is unfortunate when people are put out of work.
      Not everyone wants to go to college. I think college needs to be a choice for people that want to keep up with the way our world is progressing, because the jobs that require less education will be the first to become obsolete. I’ve had this discussion with a Canadian I met on a video game, telling me about his uncle that worked in the oil industry. Once his job went away, he blamed his town and turned to drugs. I would not be surprised if the gray death epidemic was growing because of student debt and jobs becoming obsolete. It is important that people take the loans for education because it will benefit them long term, regardless how long they have to pay them off for. There are many underlying issues but the need for education cannot be ignored. I do not think Income Sharing Agreements would be beneficial and community college is a great alternative to massive debt. I am lucky I will graduate without debt thanks to my parents, but I understand how hard they worked to get to where they are. I intend to work just as hard so I can provide the same future they did for me, for my future children.

  4. Diamond Vasquez February 20, 2019 at 4:43 pm #

    Loans can injure graduates’ pockets, resulting in student debt. According to the article, “Student debt has more than tripled since 2004, reaching $1.52 trillion in the first quarter of 2018, according to the Federal Reserve,” and it continues to increase. Not only that, it is detrimental to a personal’s social life, as described in the article from UtopiaPress. “The Next Model of Student Loans” explains, “… more young people are owning less and living less aspirational lives regarding social mobility and living more aligned with life-work balance trade offs that feel more in subsistence mode.” Well, Purdue University has a resolution to this major problem. With the fact that they are the first four-year institution to use this method, Purdue University implemented the Income Sharing Agreement; this agreement provides that the percentage a graduate pay is based on their major and the amount of funding they receive. With this agreement, “the student agrees to pay back a portion of his or her income for a set period after they graduate.” Their goal is to have students pay less than what they would have to pay if they took out a loan for their college education. As described in the article, this is a “more compassionate and less mechanistic” system for the young people.
    Personally, as a college student, I am trying my best to not use loans to help pay my tuition. I try to apply for as many scholarships as I can, which greatly aids me and my parents regarding college tuition, along with grants. I believe the only time I would use loans is if I really have to use them. Though, for those that are taking out loans to help pay their college tuition, I believe this is a helpful agreement because they do not have to pay the full amount of their student debt. What caught my attention was when the article describes, “The less they make, the less they are required to pay. And if they do not work, they do not pay anything,” relieving them from economic burden. The only thing I question concerns the major part of the agreement. What is the significance of the agreement depending on the college student’s major? What role does it play in this agreement? Besides, I believe that the Income Sharing Agreement can guide students to helping them pay their tuition without putting them into a huge amount of debt. This article was a very interesting read.

  5. Andrew Kenny February 20, 2019 at 6:54 pm #

    Student loans have become a commodity among American college students. With the yearly increase in tuition prices, most students are forced to take out loans to achieve higher education. Unfortunately, students do not always realize how much financial risk they are undertaking when taking out these loans. I realize that I have the chance of being neck deep in student loans after my graduation. Staring at close to $60,000-70,000 at least in debt upon graduation is daunting. Growing up I knew I wanted to go to college, rather than joining the armed forces or picking up a trade. I am confident in my ability to get a job immediately and begin taking on the responsibilities of adulthood. Truthfully, I know that I may be handcuffed in the first few years, but I have budgeted and saved money to try and put me in a better situation. Investing in myself is important to me because it forces me to try and succeed. Unfortunately, I may not be able to live independently right away, so living with my family for 2-3 years may actually be the correct financial decision.
    Understanding that student loans may cripple the economy is important. Purdue taking steps to create a payment plan for tuition depending on income/job status is extremely generous. Yet, it can also be a plan that universities implement to stabilize the economy. After seeing how student loans have increased by over 100%, and are now the second most popular form of debt behind mortgages, inflation is the obvious effect. The economy will decline due to our generation deciding to not spend after graduation. With no incentive to put money back into the economy, we are bound for a recession caused by our hesitancy to splurge.
    I realize that loans are a necessary evil in today’s sense. Colleges themselves are a business, and they realize they can exploit our need for a higher education. Student loans have basically become normalized as a second mortgage, and it is quite startling. Now, I do not like to think about the debt I am imminently facing. I am trying to make the most out of my college experience, and lay the groundwork to being successful. The goal is to take this high risk, but cash in on it with a well-paying job to offset the burden of debt.

  6. Shegufta Tasneem February 21, 2019 at 12:42 am #

    The ISA seems like an interesting and effective approach to minimizing the devastating effects of the rising college tuition costs. Students are handed over a huge amount of loan along with the accumulated interest after four years of college. Many of the young generations are now more interested in skipping college and moving forward straight to working part time or full time with their limited credentials because the costs of college just do not seem worth it. Four years of college hands over decades of loan burden over the students which put huge pressure on the graduates’ personal as well as professional lives. And if this becomes a reality, the literacy rate in the US will drop significantly and the unemployment rate with gradually rise. Under these circumstances, the ISA is a potential solution to students as well as the overall US government who is bound to pay a huge economic downfall if the number of college drop outs keep increasing. Paying a certain sum of money, most probably 10 percent of the income every month for a few years can solve this problem without burdening the youth. But then again, the effectiveness of this procedure depends on the students getting jobs or even what kind of jobs they get. With the rise in automation, the diversity of jobs are decreasing significantly and thus, more students will remain unemployed for longer times after graduation. This way, they won’t be able to pay the certain sum of money to the government in the form of loan payments. So, the overall effectiveness of this ISA depends on the estimation of how the future of AI and automation I going to affect the job sectors of the country and based on that, what majors colleges students decide to take. Without proper evaluation of this, the ISA cannot be considered as a major alternative to student debts.

  7. Doran Abdi February 21, 2019 at 11:19 am #

    This article raises some serious questions that I have been thinking about for a quite a while. The biggest issue I find that is being presented in this article is the process of college itself. As the article mentions, it is incredibly risky for students in college as they are unsure about their future and are being forced to invest hundreds of thousands of dollars. With the development of technology, it is impossible for students to know which major to choose as the career path one wants to go down may incredibly change. It is already tough enough for 18 year old students to be faced with the decision of what they want to do for the rest of their life, there are now evolving factors along with the amount of money that needs to be invested is growing at a terrifying rate. While Purdue’s system of charging only 10% of one’s initial income out of college may seem like a good solution, I do not think that it is a solution that can last the test of time. The job market is getting more and more competitive for many fields and as an outcome, students are investing more years and more money to gain an edge on their peers. This will only lead to the amount of student loans to continue to go up so it is not an issue of making the process of paying back student loans to be easier, but for the price of college to diminish. Numerous countries have already figured out how to have much lower college prices including Norway, Finland, Sweden, etc. I do not think that the United States should move towards an entirely socialist direction, but rather that we should try to figure out some sort of system that can make the cost of education much more affordable. Personally, I know someone who was looking at around $250,000 in student loans as she had graduated from college. This has put her in a hole that has halted her career as she was focused on immediately getting job just to begin to pay off these excruciating loans. It is very tough for students who are just exiting school who are struggling just to get an entry job to be faced with this ticking time bomb that are these student loans.

  8. Richard Gudino February 21, 2019 at 3:51 pm #

    My older sister is currently facing a six figure debt that she has accumulated since she graduated from Boston University. She graduated back in 2014 then she went on to get her masters, admittingly I do not know in what, in 2018. She has had panic attacks and has had so much anxiety since she has been out of school. Although she has had a job secured since she was in college, she still has this looming debt creating all her nightmares. She is 25 and still living with my mom and me and isn’t looking to be investing in a house or buy a car. Her main source of her college debt comes from Sallie Mae which she tells me is where most college students go to apply for loans. I did not need to read this article to know that student loans are keeping many people from thriving and having the lives that they want. I am fortunate that in my first year of college I have not needed to take out loans to be able to further my education. I commute and went to the school that allowed me to pay as little as possible which was Seton Hall. Every other institution would require me to pay at least twenty thousand every semester for four years. I have never been one to be a proponent of making college free like our socialist candidate Bernie Sanders. I know that a free college education would cause harmful effects to the already rising price of living. That being said I am open to hearing for any other reasonable solutions to solving the problem that has stopped the next generation of leaders from being able to set their roots in this world and be able to have a life, not be chained down by a six figure debt. The income sharing agreement sounds like the answer that we have been looking for. The idea that you only need to pay for a portion of the debt you have amassed. The payment plan that tailors to the individual that is based on major and whether they were able to find a job after college. Now this begs the question how much can someone really be discounted from paying their debt? Technically a discount from anything can only be a one percent discount which is still a discount. Will there be a biased towards some majors or even a race? Will all this create people to pursue a major more because they will only have to pay less for college? Does this mean that people could no longer pursue their passion? All these questions raised from a possible solution to a market that is desperate for a solution. The graph in the article has shown us that we are about to hit a critical point where the rate of inflation and the cost of college. For now I can accept this as a solution, as long as it can get rid of any bias that can be found whenever people have to make selections.

  9. Lillie Moran February 21, 2019 at 4:34 pm #

    The hot-topic conversation on student loan debt has been one up for political debate for quite some time now, but has recently become popular over the last presidential campaign. The whole “student loan” system is more simply said then done. Within the process of obtaining student loans there is the college search itself, the FAFSA, and many more other steps that are taken before a student even enters a university or college campus. One of the most pressing issues that must be addressed is the question of, “what will happen to our economy when student loans start to affect us socially?”. It is hard to come to terms with this question, especially years and years of traditional student loans, but this article in particular begins to find “solutions” to this problem. One of the main points raised in this article is that student loan debts are now higher than ever, which is partially in response to tuition costs of universities and colleges across the nation increase at a very high rate. When I was going through the college search, I not only wanted a campus that was the “best fit” for me academically, but I also wanted a college that would provide me with the best Return on Investment (ROI); however, as a lot of students search through hundreds of private and public universities, what they don’t understand is the cost. This is partially due to our generation as a whole which is known for being, in a word, lazy. The problem with the “Gen Z”, is that we do not understand that when searching through colleges, that someone is going to have to pay for it. Now more than ever, our country is at levels of higher income than it has been in years past, and now a younger generation begins to assume that these high-level incomes also apply to them while applying. Assuming that whatever they major in will eventually help pay for their living situation and college loans, students disregard and choose a university that is mainly only known for its reputation as nothing but a challenging school. Take a look for instance at the Ivy Leagues. Sure these colleges provide some of the best, if not the best, education in the United States, they also however, unfortunately cost almost twice as much as other universities. Of course an Ivy school does look good on a resume, most companies do not hire for name- they hire for merit. When students go to universities, such as Ivy’s, that consume them more in loans than in education, there is no sort of ROI when they leave. This is a big problem in our society. If our generation keeps this up, which is not a question seeing as though political debates are centered around this topic, we need to find a solution to this problem and we need to find it fast.

    This article takes a look at Purdue University’s plan to attempt to fix this problem. In short, the “Back a Boiler Program”, is an income sharing agreement, which looks to fix how student loans have suddenly skyrocketed over the past 11 years; however, this “income sharing agreement” is a terrible and immoral idea. It is simply another way of socialism, but this time, socialism is moving into college campuses. Under this plan, the less a student makes, the less loans they are required to pay. Think of it as this- you are a student who has just sunk in eight years into medical school in order to earn your dream job as a doctor. You have acquired a lot of student loan debt throughout the journey, but your new job has a salary that allows you to pay off these loans while also keeping a high standard of living. Under this plan, because you have chosen to dedicated many years of your life and work your way to the top, you are now required to pay more money for your student loans than other will who may have graduated from the same university simply due to the fact that you make more money. This is called stealing and is a socialist idea that is now poisoning the young minds of students and is enforcing the idea that you no longer have to work hard. Now, you can major in something that is essentially useless and you will now reap the benefits of someone who has spent hours and lots of money to earn something. This ISA plan is not a solution to the problem of student loan debt- the ISA plan is the problem of student loan debt. Instead of rewarding those who work hard, we are now punishing them because it is simply “not fair” that a person who has not worked, has to pay a lot of money. In order to fix the problem of student loans, we have to educate students on what students loans entail and what ROI’s actually mean. Instead of encouraging students to go to high tuition universities simply due to reputation, we need to encourage students to go to universities that will provide the same education at a much better and affordable way.

  10. David Torres February 21, 2019 at 5:40 pm #

    Nearly every person that decides to attend a college or university is taking out a student loan. It is pretty much the norm nowadays unless you were fortunate enough to have a scholarship covering your entire school tuition. For example, when I graduate, I am going to be in moderate student debt. I do agree with this article that it does put a lot of stress on the student because of how they put themselves in such a great amount of student debt. This is because the student is taking a huge risk of actually getting through school and graduating, not flunking out and wasting a tremendous amount of time and money. Just thinking about that can be scary. Even with these negative thoughts in mind, I don’t think that taking out huge student loans can be a significant cause of developing a mental illness. Taking out large student loans are normal for people that want to continue their education and pursue a career that provides a healthy income for them in the long-term. However, I don’t think that the Income Sharing Agreements are a good idea at all. With this, the students do not take out a loan, and pay back their tuition depending on how much they make, basically a percentage. “The less they make, the less they are required to pay.” I feel that this is unfair because if a person that was rewarded with a very high paying job post-graduation, he or she is still being held back by a more significant percentage of money that they owe back to the university. If they earned that salary, I think it would be right to better reward them by allowing them to keep that money, and not let their classmates off the hook just because they do not make as much. Lastly, another bad idea from this Income sharing agreement plan is how, if you do not find a job, or decide not to work altogether; you do not have to pay back anything. I find this interesting because the student has utilized all the services that the university has to offer for multiple years, and will not have to pay anything because they decide not to work. It is unclear to me as to how this will work long-term.

  11. Cameron Kharazmi February 21, 2019 at 7:59 pm #

    My generation has been hampered by a variety of issues such as climate change and increasing national debt, but no issue plagues our society quite like student loan debt. These days, it seems as though the route to an economically successful(or stable) future is simple. Graduate high school, go to an accredited 4 year university, come out with at least a Bachelor’s degree, and from there, try to find employment in a crowded and extremely competitive workforce. Of course the issue in this is that the majority of Americans cannot afford tuition of upwards of 20 thousand dollars a year like most universities offer, so both millennials and Generation Z students take up massive amounts of student loan debt that may take a lifetime to pay off. Although the article brought up an interesting new method of paying off student loan debt based on income and major, it doesn’t solve the issue of increasing university tuition as well as the ultra competitive workforce and crowded private industry. If you are an individual with dreams to make enough money to support yourself and your family, 99 percent of routes to such a goal involve the collegiate route. However, your income will likely be affected by your student loans despite the efficiency of the ISA plan, and in most cities around America, that will be an issue. Around the country property values are rising, in addition to the general cost of living. Typically, jobs coming out of college do not pay very highly, and any income for a newly hired college graduate will go to their student loans and living expenses, leaving very little room to save for the future, and leaving them in economic danger as they risk not having funds if they are fired. On a personal note, I believe all of these issues that have been said to pose a risk to our generation are real and are a present danger to society. I also believe that this is the result of close-minded earlier generations, whose inability to look in the future has created policies that have effectively screwed our younger population. They had set out college to be the route of success, burned a massive number of fossil fuels that have severely damaged our ozone layers, and contributed to countless different issues that have destroyed our planet and our economy. I believe that we do have the minds in my generation to combat some of these issues, but my conscious tells me that much of the damage left by generations prior is irreversible.

  12. Horace Bryce Jr February 22, 2019 at 12:47 am #

    Metaphorically, if one were to strip every bit off flesh off of the body of America and expose what it is that keeps its systems pumping; at its very core one would find capitalism. Nonetheless capitalism is causation oi the inflation levels of student loans. Americans went through a period were it used to be possible to pay their way through college just working a regular part time job. Over time the price of tuition started to steadily increase at an alarming rate due to the demand for higher education. Higher education correlates with higher salaries making the Americans who know what is good for them pay a lot to obtain a degree from a higher education institution. The banks saw this as an opportunity to capitalize mostly off of the working class by offering student loans which is virtually a death trap for those looking to up their social mobility. In fact, the banks have been so successful at this that student debt reached a whopping $1.56 Trillion in only the first quarter of the 2018. This is absurd and frankly unacceptable. While higher education is valuable, it should not have a price tag so large that it becomes something that dangles over a graduates head for the rest of his/her life.
    A quote that really struck me in the article stated, “Without upgrading capitalism with more ethics, we could find ourselves in serious trouble.” This is one that really resonated well inside of me and I strongly agree. With “a labor market that can no longer provide the services society needs,” “an inverted population pyramid” and “generational press” as potential penalties for having such high student debt, it confuses me how anyone could disagree. America has a tunnel vision on moneybags. This hinders a large amount of the countries corporations and politics from seeing the long term damage things such as high students loans can cause. A good example of ethically upgraded capitalism is Purdue University and its offering of Income-sharing agreements (ISA). This program allows for the the graduate to make payments 10 years after graduation. Not only that but the percentage the graduates pay depends on their major and funding; and to make it even better, the less they make the less they are required to pay. Needless to say that if they do not work, they pay nothing. This is a very interesting and bold approach to the societal issue of student debt. While I would advocate for ISA’s, I also ponder the long term effect that application of such a progressive system would have. Progressive usually means that it is more moral and less capitalistic meaning more happy people but less money. Less money for the colleges and banks that is. I read somewhere that college got so expensive because they are costly to run smoothly and the high salaries earned by skilled workers. Graduates agree to pay back a portion of their income for a set period after graduation meaning a delay on the college cash flow. Would this in turn make professors and college officials even more upset with their paycheck than they already are? Would this stifle the growth of the institutional systems of college as it would student debt? Both questions are ones that should seriously be thought about. For if the repercussions are not thought through thoroughly the implementation of ISAs could cause more harm than good in America.

  13. Luke J Tyler February 22, 2019 at 10:43 am #

    After reading the article that goes in depth about possible ways the student loan crisis can be fought, I began to feel more optimistic about the future of my generation. The idea behind ISAs (income sharing-agreements) is that after graduation a percentage of the graduate’s income will be taken every year as a way to pay back the school. While many of us today know that income varies, the person making more will close the difference for the person making less. Even though the percentage is the same, I have a feeling that those making the larger income will complain that they are taken advantage of because they are paying more money for school than the person making less money. Many might view this idea as an unequal distribution of wealth, but the ISA system actually makes the payment for college more justified. Taking a loan out for college is a huge risk because it isn’t guaranteed you will find a high paying job that can pay back an expensive loan.
    Also, using a percentage of someone’s income after college is overall a better idea because it curbs the problem of delinquency rates. If loans taken out for college is reduced, then the number of people defaulting on payments will fall. The impact that ISAs have on loans is important because within the next couple of years the economy will start to feel a situation like that of the housing collapse. Employing this system now could in turn add support to the debt crisis and create growth for colleges. When students decide on a college a huge factor is the price tag. Now if students can attend without the worry that they will be burdened by loans, the popularity of post-secondary education could increase. I think it is important to note that these ideas may seem outlandish, but schools already do similar methods as a way for students to pay for college. Seton Hall has a graduate assistant program where students would work for the university for free in return for a graduate degree. Though these systems differ from one another, I could see how some colleges would be open to this new idea. Purdue University created the system and already has the program set in place. An important take way from this innovation is that is possible that student debt can be avoided, and it is already being implemented. It may take a while, but I’m confident that many schools will begin to adopt similar practices in attempt to spur growth and ensure fairness.

  14. Peter Honczaryk February 22, 2019 at 10:45 am #

    Student loans are the main cause of students having their mid-life crisis after leaving college. These loan companies give you a six-month grace period after you graduate. During this time, there is no interest being placed on these loans and instead this time gives you a chance to find a job so you can spend all your money trying to pay off that loan. The problem with loans is that they take forever to pay off especially if you’re only making the minimum payments each month. There was a commercial once where a new graduate was having a graduation party and his grandmother goes up to him and says “Congratulations, I also finally finished paying off my student loans!” This startled me that it’s possible some people spend their whole lives paying off their loans, and recent graduates are looking to invest in new things like cars, apartments, or houses, but instead are focused on the time frame and how long it might take to pay off a $50,000 loan. For $50,000 they could have bought a new car, put it towards an apartment, new house, vacation, endless possibilities but instead have to pay off loans. It is said that those with college degrees tend to make $400,000 more in their lifetime, but what that study should say is people make $350,000. Its scary to read that loans have gone up 157% since 2014 because of the fact that there are nearly 20 million students enrolled in universities across the united states. These loan companies are giving out loans to desperate students who need to pay for their next semester but cannot due to a lack of money, and so these loan companies hand it to them. The loan collects interest and that’s how the companies make a profit off these loans. It’s actually a super business because if there are 20 million students in universities, and even if only half of these students take out loans, they make a heavy profit from the interest that is going to be accumulated, especially because modern society is rapidly changing and so there is always the possibility that the jobs that are available now will be taken over be AI or new technology. In the end you as the student will lose, but there is one way you can try to get around this problem. Assuming that you received a decent scholarship and get some help from you parents, it would be wise to get a part time job. Not the type of part time job people only work 2 hours a week, the type where you work 20-25 hours a week, working hard to make a decent paycheck per week, studying hard so that you don’t have to take repeat credits and spend more money retaking those credits, and also limit spending. Doing this should allow for you to be able to pay for your semester tuition, and even though it might be a long four years, the outcome is finding a real job that allows for you pay for expenses that you want to pay for like buying that new car, saving for house, and other stuff without worrying about loans because school is paid off.

  15. Matt February 22, 2019 at 10:56 am #

    I found this article fascinating. I am a college student and have felt the impact of tuition rising. And student loans constantly being increased. Since inflation has been on a steady increase. It can have a huge impact on a college student’s life. Graduating with 6 figures of debt can put a burden on a student for the rest of their life. Even once you graduate and obtain a steady job. After every paycheck you obtain a big amount is going to student loans. And with that much debt it could take years if not decades to pay it all off!
    As important as college is. Before committing to a university. I definitely thought of using the money I already had to start my own business. I definitely considered inventing something with the money I currently had. Because paying 6 figures of debt is a very large number to wrap your head around as a college student. I knew by going to college and taking out loans. That this was going to limit me in the future, and I would take much less risk. Knowing all the money I had to pay back. I would pass up on opportunity’s that may be very profitable. Because I could not afford to take that risk.
    There are always going to be proposals to lower student debt. However, these are just opinions. Most never happen. Tuition and Debt has been on a steady increase for many years. In today’s world a college degree is priceless. It gives someone endless amounts of opportunity’s to be successful. University’s allow you to establish connections and get a feel for living on your own. However, the price of getting the degree is becoming a huge burden to students.
    I have little siblings that are several years younger. I think it is scary to even think about what they are going to have to pay for college. If inflation continues college may not even be an option for them. Only the very wealthy will be able to afford going to a university in the future if nothing is done about inflation. A college diploma will have much more substantial worth in the future. Because the amount of people who obtain them is going to plummet. Tuition is increasing. Student debt is increasing. However, the amount of high school students choosing to attend a university is going to dramatically decrease. I hope we can find a solution to this inflation. Because if we do not the education system in America is going to dramatically change.

  16. Daibelis Acevedo February 22, 2019 at 12:28 pm #

    As much as I love going to Seton Hall and appreciate the education I am getting, I still think about the student loans that I will have to pay when I get out of there. After reading this article, of course, I had to think of my own situation and how I can relate to what I am reading. Overall, the number of students who are going to be in debt after college is very extensive that I don’t think many people realize. It’s hard to say no to student debt because getting the best education possible, with the place that will give you the best opportunities overrides the thought of the loans you will be taking out for the moment. The article mentions the future loss of jobs and how this is impacting the middle class. It’s important to take this into consideration because students are going into colleges with the mindset that whichever career path they choose, they will find a job and unfortunately that is not the case.
    A scary aspect of all of this is the issues that the debt can cause us, students. As it says in the article, “young people faced with crippling debt suffer more mental health issues, and adulting challenges sometimes taking significantly longer…” I can imagine that after all the years of college, and finally being done, the anxieties of having to pay back loans kick in. It’s very difficult to manage future plans, adulting, and life after college while thinking of the debt that one has at hand. I really liked the idea of Income Sharing Agreements (ISA) because it is a more peaceful way of paying back debt. As it says in the article, it is “less exploitative.” I think for young people who have just finished college, this is a more beneficial way of paying back the money they used for their education. The only concept of the ISA that I did not really agree with is the fact that if they do not work, they do not need to pay it back. I am not sure if I understood that correctly, but I don’t understand how that would be fair in any way. Of course, it would be of great relief and take a weight off many shoulders, but what about those who sacrifice their time to make sure that money gets paid back? This part threw me off because if someone else receives the same education I did, and I have to pay it all back in the end, they should have to pay it all back too, someway or another. I really enjoyed reading this article and learning more about the alternatives to taking student loans.

  17. Brian F February 22, 2019 at 1:30 pm #

    The Income Sharing Agreement model highlighted in this piece may seem like a unnecessarily radical proposition, but unfortunately I think that an idea that out of the box may be the only way we can solve the mounting student debt crisis. Student loan debt has tripled in the last 15 years, with only a small portion of that being inflation. College graduates are leaving school with an average of $37,000 of debt. I do not know exactly what our education system should look like, but I know a system that looks like that is broken. Ofttimes, millennials are labeled as lazy, unmotivated, and irresponsible by older generations who had the luxury of graduating from college with minimal debt and were therefore able to afford to buy a house that’s value increased by 200% during their lives. Younger generations, on the other hand, are unable to take on another massive debt, so they have no choice but to rent, which returns no value. This pushes back buying a house, getting married, and having children because they are unaffordable, not because millennials are avoiding responsibility. The people in debt also have less disposable income, which obviously is not good for the economy. Another concern is the risk. In the past, taking on debt in exchange for a college degree was almost always a smart move, as the degree would guarantee a higher paying job and the ability to pay back the debt. That may no longer be the case anymore. We are currently in a transition period in regard to automation. It is unclear what job type might be the next one to be replaced by some form of artificial intelligence. There is a realistic possibility that students will not be able to find a job in their field five years from now because the process is automated, so they would have taken on all of that loan debt for nothing.
    Besides new repayment systems, another way to try to curb the constantly rising debt issue is to try to curb the constantly rising tuition. Public schools receive tax dollars, so they can be answerable to the tax payers. Tuition rates go up every year, so the size of the loans that students take out are going up to match. However, while the student takes on future debt, the schools are being paid upfront by the lenders. The schools have their money, so they do not really care what happens down the road. There is virtually no comeuppance for the schools when a borrower can’t pay their creditors. This creates a situation where colleges have almost not incentive to keep tuition costs manageable. If the universities shared in the risk and faced consequences when their graduates defaulted on their payments, even in a small capacity, then schools would have a little more interest in keeping tuition increases smaller.

  18. Kyle Stephens February 22, 2019 at 1:43 pm #

    Incoming-sharing agreements are the student loans of the future. This is a much cheaper and less stressful alternative to the traditional student loan. With this program, students no longer have to be in increasing debt for 10 years. Students will be able to have a set payment plan based on their income. I also love that this plan takes into account that a job out of college isn’t guaranteed. I believe that with plans like this colleges are giving people the opportunity to go for a major that they love, but may not have a whole lot of success in. This plan is absolutely perfect for that sort of situation. For example if my major were art I would jump all over this deal. I could go get my degree on the plan and if I don’t find work right out of college, then I don’t have to worry about paying because I only pay once I’m employed. Another part of this deal I like is that you pay more depending on your salary. This works mostly in favor of those who have lower paying jobs because they pay much less then those who went to medical school for example.
    The next upside of this deal is it reduces stress for the student/graduate. This is because our generation is swamped with student debt. It creates an unbalance in life because graduates focus too much on work because they want to pay off these student debts. It lowers their social mobility because work becomes the main priority. We want to be as successful as possible as soon as possible to get the “monkey off our backs” that is the student loans.
    It is clear the current student loan process just doesn’t work. The loans have to high a value due to inflation causing the main type of debt in America to be student loan debt. Over the best decade there has been a 157% increase in the amount of student debt per household. This is the main reason I believe this ISA deal is the way of the future. We would eliminate at least part of the student debt and have a easy, and set payment schedule.

  19. Edward Holzel February 22, 2019 at 2:00 pm #

    Student loans debt is now the second largest behind mortgages. The average student in today’s world is 40,000 dollars. Students are being extorted by colleges to pay more to get an education that will allow them to get a good paying job. I know some people who are going to graduate with over 200,000 dollars of student loans debt. According to the Bureau of Labor Statistics, about 70% of high school graduates in 2015 went on to college. The amount of college students going to college every year out of high school has been increasing, so more than 70% of high school students will graduate college with an average of over 40,000 dollars of student loans.

    Going to college seems to be getting riskier by the year. With technology advancing substantially every year, finding a job out of college will become more challenging every year. On top of jobs becoming more and more scarce, student debts are ballooning as well. Students are paying more money for a chance to find a job when jobs are starting to be removed from AI. The odds entering college with a job being in demand and then in four years, that job is no longer in demand. That college student is stuck in a situation where they can not find a job and the student loan debt is extremely high.

    There are some forward-thinking schools, such as Purdue, that are implementing different compensation approaches from their students. Income Sharing Agreements (ISAs) are agreements that take a percentage of the graduate student’s income as payment for the education provided. The percentage of income paid to the college changes based on the amount of income is being earned.

    The ISAs will allow college students to get their college level education and not be weighted down by the accrued student debt. Students will have almost no risk associated with going to college with ISAs because even if they do not find a job, they do not have to pay the college anything. Regular student loans debt forces students into unnecessarily extreme debt, for a college student, that can cause these college graduates to not progress in life. I believe that the weight of student loans debt causes people to put a hold on many important life decisions. These decisions could include putting off marriage, having children, buying a house, and many more implications. The ISAs provide the college graduates security that they would not have to pay off outrageous debts and only be held to a certain percentage based on what their annual income is.

  20. Trovonta Burgess February 22, 2019 at 2:26 pm #

    As student loans are a constant worry and pain for so many individuals pursuing secondary education, today almost 70 percent of college students graduate with a significant amount of debt. Students loans are the only options some students have to even attend a university because of the rising tuition prices and increasing loan interest rates. It is amusing, yet, the reality we live in where loans triple in the amount over the course of 10-15 years making it almost impossible to pay back. There are many factors that play into the stress of student loans and this generation’s lack of paying them back in full. The workforce is steadily taking away certain jobs and certain markets are completely tuning automated resulting in a loss of jobs and income as well. There also comes a point where you lose motivation and become lazy in repaying them or keeping a job. Unlike the past, student debt will only increase and tuition cost will become so unaffordable many will consider other options for paying for college or just not go at all.
    In this article, it discussed a possible solution to all of our current worries about student debt and increasing prices by the Income sharing agreement (ISA). When reading about this I thought this was a good idea because it lessens the burden of loans and the paying period over time as well. It would be nice to know that students could get a degree and only have to pay a portion back depending on the major which was chosen. However, this system seems like college child support where you pay while you’re employed and when not, you don’t pay anything at all. I’m not sure if this is the most efficient solution to solving our problems as there are many factors and issues that occur within the department of child support services. The sad reality is that the changes that need to happen will not be implemented quickly enough, therefore, the problem will get worse. There is still hope for the future but until then we are still stuck in this crisis of student’s loans and debt. For as long as our capitalistic society continues to live and breath the problems we face can not be resolved.

  21. Jack F Comfort February 22, 2019 at 3:16 pm #

    Student loan debt will have a domino effect on the U.S economy. There’d the obvious effect that all of our educated workers are going to be starting with over 100k in debt dissuading them from going to college. They are also reported to have some of the highest rates of depression in the U.S. Not to mention the loan bubble and the recession we are currently heading towards. All of the factors equal a major economic problem we are going to have to face in the near future, the Titanic of economic hardships if you will. We are going to have to do something to remedy the situation and quick. With tuition prices always rising we are going to be contributing to the problem more than ever. Hopefully the idea of ISA’s will be what we need to steer clear of this danger

  22. Keegan Sullivan February 22, 2019 at 4:25 pm #

    Student loans is something that I, as student, hear over and over again in almost all aspects of my life. From my parent’s warnings to my roommate’s complaints, it is something I cannot escape anytime soon. Seeing the large amounts of debt that students go into can be terrifying, but studies like the ones in “The Next Model of Student Loans” done by Purdue are helping people like myself be prepared for the future. I am not a supporter of the idea that college should be free by any means but I think finding a feasible alternative to this crippling student loan debt is very important to me. The Income Sharing Agreements is a very interesting concept that I had not heard of before reading this article. It does serve as a good option for students as it takes their future into account. Essentially when us kids go to college we should be getting equal education in some field but it is the field that determines our income, not how well we performed or how much we retained form the institution we attended. This is why I think the ISA’s will be successful. Someone in the same class as me could be going into a doctoral field while I want to do nothing more than sit in an office and our pays will be very different so why should I have to pay the same amount. It is definitely not an easy task to eliminate student loan debt but we are headed in the right direction I believe. On issue I can see arising comes from the sheer nature of paying for school. We go to college so we can be competitive in the job market in the future. In making college an equal playing field, you also do this to the job market. It is very nice for the people at the bottom who can now compete, but it is unfair for those people who work very hard to set themselves apart and go above and beyond to stand out in the world. The charts provided in the article are certainly alarming but hopefully more schools like Purdue will continue to study these trends and we can prepare for a better future.

  23. Trevaughn Laney February 22, 2019 at 4:36 pm #

    Student loan debt has always seemed to be a problem, but it looks like there is no sign of it stopping anytime soon but it will get worst or should I say that it is becoming worst. I think if this problem is left unchecked than the money gap that separates the rich from the poor will keep increasing. The main problem is for most jobs in today’s society you need a bachelor’s degree just to have a decent paying job and although there are other ways around jobs like that, the means of getting around them aren’t so easy. In most cases you have to know someone who is already working there, it’s either a job that has to be passed down or you have create something and be able to sell it but even with all these ways of getting around the hiring process, you still need to be able to afford the resources needed, i.e.: the materials needed for selling your product. The inflation of student loans is mainly affecting minorities in povern stricken situations because the community is poor and gaining access to simple things like the internet is a difficult task because the only place that has free access to the internet is the usually the schools, your local library, Starbucks, or some public places. To some people this has never been an issue but there are a lot of unseen factors they play a role like after school some kids don’t have the time to go to the library or even stay after school and have to use only their notes that they took and if the notes are wrong than the questions will be wrong and the domino effect has officially taken place. And this sequence of events usually takes a toll on the kid and discourages them from putting any effort into their school work. Not only that, there are problems internally that go on within schools that are in dangerous areas I.e.: Drugs, gangs, and violence. But going back to “kids not having time to stay after school or go to the library” even if they do have the time to do so, there are other factors that hinder them from doing so I.e.: no transportation or their parents don’t want them to walk back home after a certain time. The main thing to take note of here is these are all little kids who are faced with problems that adults are supposed to be taking care of but because their parents do not have the proper education they have to find minimum wage jobs and work full time to maintain the basic needs for their survival and although you can live without the internet, not having it in today’s society will affect you and everyone you are trying to support. Children not having 24 hour access to computers places them behind the learning curve by a lot because if you don’t know how to use a computer today than you won’t be able to keep up because taking notes by computer is much faster than taking notes with a pencil so unlearned typing in a class at the universities today will be very detrimental towards your learning. I say all this because as long as there is student that continue to increase then there will less people being able to go to college. I personally believe that there should be a class that shows people how to use the internet because if you know how to use the internet than you can learn everything that you would learn in class. These highlight the reason why there are stereotypes of the black community only being successful if they know how to play a sport really well since you don’t need any kind of electronics to learn how to play. All you need is a ball and goal. In other privileged communities having access to the internet plays a huge roll but that’s just a small piece. The privileged community usually has access more advanced resources like tutors who can help them whenever they are at work or even if the parent doesn’t understand their homework. Also, the community is more relaxed, and they don’t have to worry about any extreme crimes and even if there are any extreme crimes, they probably have enough money to cover the damages within a few months. The teachers are more advanced and involved with the students, so the kids actually enjoy learning and more activities arise in those kinds of environments. Standards are also usually higher, and what I mean by that is graduating high school is a really big thing in the minority community, and one could say that to the privileged community that, graduating from high school is equivalent to graduating from grade school.
    All these problems arise from previous generations but if a kid that is a minority who lives in a less privileged neighborhood wants to change his conditions than he’d have a hard time in doing so if he doesn’t get a scholarship to help pay for his degree or play some sort of sport.

  24. Daniel Gibson February 22, 2019 at 5:28 pm #

    We all seem to have a love hate relationship with student loans. The good news is the fact that a lot of college students wouldn’t be where there are today without them. On the other hand, no one likes having to pay loans back. Student loans has been to the hot topic for years now and it’s only getting worse. With a rapidly growing population in the U.S, more and more loans are being taken out. I don’t blame our generation, because this is just what we grew up to. Go to high school for four years, then college for another four years hoping to come out with at least a bachelor’s degree, and then search for a decent job. We have been brainwashed that this is the only way to be successful in life, but this is false. The problem though is the competition now. Employers these days using a bachelor’s degree to separate us into pools. There must be a way for them to cut us people and that’s what they use. Sure, you look successful people such as Bill Gates and Steve Jobs who dropout of college, but I hate to say it they got lucky. Anyone can technically start their own business and follow their passions after high school, but the competition is an all-time high right now, so people don’t have many choices.
    There are several ways of only taking only a few loans out or none. This list would include community college, FASFA, scholarships, commuting, and better financial literacy. I think people today look at college as a need which means they have to go to the best university to make themselves look better. I’m a firm believer in getting the same education no matter what school you go to. College is only a huge investment if that’s what you make of it. There are plenty of solutions that allow people to not have thousand of dollars in loans so then why do they still. It really all depends on your own personal plan. There is a reason they don’t teach you a lot about financially risking in your high school. Another issue that must be discussed is that many students think that a degree just earns you a perfect job. When you go out int the workforce, it’s a whole other ball game. A degree is just the start of a career. Student loans are hurting the economy, so don’t waste four years of your life if you’re not going to put the effort in.

  25. Claudia Ralph February 22, 2019 at 6:09 pm #

    Student loans are out of control. It’s that simple. While our parents and grandparents may have been able to work and support themselves to put them through college, it is nearly impossible for undergraduates today to work to pay for college, while getting the fulfilling educational and social experience that they are looking for. This leaves only one solution for undergraduate students that are not in a fortunate situation financially, that is student loans.
    As we know from the article, student loans are out of control. Something that was once manageable to pay off has become something that cripples adults long into their middle ages. It is also important to note that there are further ramifications from something like this than just people not being able to pay off their loans. It is not good for the economy for these skyrocketing interest rates and never-ending payments to continue to cripple recent graduates long into adulthood. The impact will seep deeper and deeper into the social and economic aspects of one’s life. The government doesn’t make it easy on us either. For those who are fortunate enough to be eligible for the aid are expected to pay it back almost immediately after graduating college with not relief or leeway on payments. If you transfer schools or go to grad school, you must continually prove your enrollment at another institution. The government does not treat college students like humans and seems to forget that there are people out there that do not have the disposable income to pay for college, which is why there are in this predicament with their tuition in the first place.
    The government needs to look at the wider implications of what student loan debt can do to the American people and how it will seep into the economy and into other social aspects of life.

  26. Melissa Caniz February 22, 2019 at 6:30 pm #

    Now a day’s student loans are a burden not only to the student but the family as well especially if the student took out a private student loan, now that is a death sentence to the cosigner. College tuitions only rise over the years and government help decrease as you start working and have more family assets. Therefore, the only option left for the student, whether they like it or not, is to take out loans. Many low-income families are not able to afford college tuition rates, they do not receive sufficient government help and therefore the only resource available to give their children a good education is to take out loans. Once that loan payment is signed, the student has signed a document known as the Master Promissory Note (MPN) which is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s). According to a graph in “Utopia Press” Student loans have tripled since 2004, reaching 1.54 trillion which equates to the second only mortgagee debt in the U.S. If there is a solution that exists alternatively to signing a death sentence with student loans, then it would be appreciated. There is a solution that Purdue University is offering its students, which is an income-sharing agreement or ISA. An income-sharing agreement is and An Income Share Agreement (or ISA) is a United States financial structure in which an individual or organization provides something of value (often a fixed amount of money) to a recipient who, in exchange, agrees to pay back a percentage of his/her income for a fixed number of years. According to Purdue University ISA reduces the risk and economic burden by: Reducing the percentage graduates pay will depend on their major and the amount of funding they receive,(2) The less they make, the less they are required to pay, and what I find best of this solution is that if a student does not work then they are not required to pay anything. This is an alternative option that may work for some students but for others, it may not be the case.

  27. Daniel McNulty February 22, 2019 at 6:51 pm #

    As we continue to progress into the future, many things are constantly changing. College tuition is something that has grown substantially within the last 30 years. As the price of receiving a college education continues to rise, so does the growth of students taking out student loans. It is becoming the social norm to go to college in today’s society, unlike years ago. With this being the case, college tuition has been going through inflation, and continues currently. In addition, “while job uncertainty increases with rising automation, what about students staring down the barrel of six-digit loan obligations yet to come?” as stated by Michael Spencer in his recent article. With this being the case, not only are students in trouble, but the overall health of our economy, both short term and long term. For the most part, not much is being done to change this either. There is one University that is actually making changes to help students. This university is Purdue. Purdue came up with a plan that allows students to make payments for up to 10 years post graduating. What Purdue University is beginning to utilize is called an ISA or an Incoming Sharing Agreement. The way ISAs are intended to work, is based on the student’s major and the funding they receive. I believe that this is going to be a plan that many universities may use in the future, hopefully the near future to allow student to have the burden of student loans eased. This plan is one that will help alleviate the student loan crisis that is underway, as loans will become much more manageable for each and every individual student, as each plan is customized to their specific career path. The Incoming Share Agreement can possibly be the beginning of the end for the student loan crisis, and may lead to more change to fix this major problem, where much has not been done in the past.

  28. Rayzan Alarashi February 22, 2019 at 6:53 pm #

    Its no argument that student loans have detrimental effects on student’s post-graduation. For those who simply can’t afford college upfront or don’t receive adequate scholarships, loans are the only hope to funding their college education. In the moment it may not be so bad, we may think to ourselves that after graduation we will simply obtain a job and then slowly pay of our loans, but that is not always the case. In reality, not everyone is able to obtain a job following their graduation causing their dept to continue pilling up. As mentioned in the article, students who are a part of Generation Z have reaped the most harms from the student loan crisis. Since 2004 student loan debt has more than tripled, reaching a total of $1.52 trillion, only second to mortgage debt. This has had a direct impact on many social aspects such as lower fertility rate since individuals are finding it harder to acquire stable jobs in order to start a family. Not only is the fertility rate impacted, but students with crippling debt in this generation are more prone to suffering extreme mental health issues. Leaving this issue alone and hoping that time will fix is simply not going to happen. As we all know, technology is only advancing from this point on, and we are constantly finding new ways for AI to take over roles of some workers. These advancements, although good, are having a direct impact on the job market and seemingly decreasing the availability of jobs in our society. What is appalling to me is that some jobs that we have today wont even exist in the next 15 years, leaving me to question why we are simply not caring for this issue as we should be. The solution proposed by Purdue University could possibly hold the key to resolving the student loan debt crisis. With their implementation of the income-sharing agreement, students are less likely to fall into the trap of debt. It would make more sense to have students pay their debt back based on their major and the amount of funding they receive, since it can vary for all students. Also, it is great that students would pay a percentage based on the income they make, and if they don’t have an income, they wouldn’t pay at all. This would help to eliminate the risk students are taking with loans since there is no longer a concrete amount they are required to pay even if they don’t obtain a job after graduation. Since time is only making this issue significantly worse, it would help to begin implementing new ways that could possibly replace student loans, beginning with ISA’s.

  29. Rachel Leto February 22, 2019 at 7:50 pm #

    A fear that all students have that go into college are student loans. Whether it be that they do not know how they are going to pay for it or if they just do not know enough about how they work. Colleges today are raising their tuition costs every year and it is only becoming harder for people to pay for an education that they need because, today, it is near impossible to find a career without a degree. The article says, “Student debt has more than tripled since 2004, reaching $1.52 trillion in the first quarter of 2018, according to the Federal Reserve”. This is alarming for many reasons because that number is going to keep getting higher and higher. From the burden of student loans, people are turned off from the idea of college or, when they are out of college, to start a family. This pressures people into getting higher degrees to make more money to pay off their loans, and by doing that making more loans for themselves.
    The article mentions a way to make student loans more manageable. It is called an Income Sharing Agreement (ISAs). The point of these ISAs are to lower the risk of these student loans having a big impact on the student’s future. The student would pay a certain percentage based on their major and the amount that they received in funding. If they do not make as much money, they do not have to pay an absurd amount to pay off their loans. This is so helpful because many students who go to school cannot pay off all of the loans that were given to them in a lifetime. Some elementary school teachers have six digit student loans debts and it is not fair that they have to carry the burden of the loans for perusing a career that does not pay as much a brain surgeon. Paying a percentage sounds much more appealing than being scared of being buried in debt. This change may even change the minds of students who were not planning on going to college because it was too expensive. All colleges and universities, to make education more appealing to the public, should adopt ISAs.

  30. Santiago Gomez February 22, 2019 at 7:58 pm #

    In today’s world taking out student loans is a social norm to our American society. The same goes along attending a four-year university. As it would look like a stigma for not attending. Because now we view a college degree as a requirement to obtain a good paying and fulfilling career. Student loans are a burden to those who find it difficult to pay for their college tuition. As college tuition will only increase over time and probably be unattainable for those who cannot obtain it. I think a four-year degree became somewhat feasible, with the creation of FAFSA. It has helped many students with a need-based background help to pay for college. But there are those who with the financial help still cannot afford it. Taking out private loans is the last thing families want to do. As corporations are hungry for money and demand their money to be paid back in a snap of a finger. As the article said student debt a tripled since 2004 and reaching 1.54 trillion dollars. But as my economic textbook mentions, as college tuition increases. So does student enrollment. Meaning no matter how much tuition is costing, students are still enrolling. That being said, the student debt will just only increase and nothing we can do about it. The article said Purdue University found a solution for its students to battle debt. The Income Sharing Agreement which basically says an organization provides some sort of capital to an individual, in exchange that the individual pays back a percentage of their income. The percentage will depend on their major and the amount they receive. Also, the less they make the less they pay. It may seem like a good idea, I find a bit problematic. Why would they depend on the type of major you study? It seems Purdue finds that a STEM degree much more valuable than an art history degree. They must assume that an art history major will much earn less and probably be out of work. Assume the art history degree holder is unemployed (as many would think so). It just does not seem fair for the STEM degree holder to continue to pay the loans, while art history degree holder doesn’t pay anything.

  31. Demetri Allen February 22, 2019 at 8:04 pm #

    In today’s America college is a big component to most people’s educational experience. If a person wants to secure a high paying job, they need a college degree. The problem is that college is too expensive for the average person to afford. Michael K. Spencer’s article dives into how student loan debt has dramatically increased. I have a different perspective on colleges than most. To me Colleges are a business, and at the end of the day it is a business’s number one priority to make a profit. With the huge spike in student loan debt Spencer described over the past 11 years sparked the argument for free college, however that presents its own problems. From my earliest days in school I was told that graduating from college after at least four years was my destiny. Some student’s income simple doesn’t meet the monetary requirements to achieve this future. In a desperate attempt, many students are forced to take out loans just so they can afford these schools, loans that they will spend years paying off after graduating. The problem I see is that for low income Americans are put at such a disadvantage when it comes to furthering their economic career. This is why the argument towards free college comes from. The only way colleges would become free would be for the government to completely subsidize them. If that happens the college experience becomes completely different. Teachers are now technically government employees meaning their incentive to provide a quality education experience diminishes drastically. On top of that campus infrastructure might be heavily reduced. There would also be a huge raise in taxes to pay for these colleges. This presents an economic trap where colleges are too expensive for mid to low income households and making colleges free would negatively affect the economy more.

  32. Alexander Dornbierer February 22, 2019 at 8:18 pm #

    Due to the massive debt that my sister accumulated my parents decided to pay for my tuition so I would not have the large amount of debt looming over my head for the next 15 to 20 years. The article discusses that the student loans have tripled since 2004 and how the tuition rates have been growing. This could be due to jobs requiring more education than the past. A job that required a high school diploma now require a college degree. That means that to secure a job you need more education. And that means more money you have to spend. The article also discusses how job uncertainty is increasing. People are spending more money to secure jobs that, in return, or not secure. This is not the time where an employee works at a company for 40 years and receives the benefits from said company. My uncle had been working at an electrical company for many years. He was coming up to his retirement and he had a couple of months left. My uncle was getting his retirement fund ready, about to celebrate, when the company let him go so, they didn’t have to support him in his retirement. Due to this he had to work another 6 or 7 years so he could retire safely. This is an example of how unsecure the job market is which is scary seeing how high the student loan number and tuition rates are. People are spending large amounts of money to get good degree’s so they could get good jobs. But the sad truth to that is that the college graduates will not find a secure job, so the student loan won’t get paid of till many, many years later. With the average interest rate on the loan being 4.81% and 7.44% for a PLUS loan, the longer they take to pay off the more money they have to pay. There needs to be more ways to cut the amount of student loans. The ISAs is a growing way to combat student loans but still isn’t perfect. As time passes, I am sure that there is be new and improved ways to make college more affordable or make student loans less expensive in the long run.

  33. Devero McDougal II February 22, 2019 at 8:18 pm #

    Student loans are something college students will have to deal with throughout their lives and it can prove to become a problem. As college tuition grow more and more students will have to take out these loans. The problem with student loans is that people will have to pay them off throughout their lives. By the time some people can pay off their loans they can be 40 or older. After graduating college the first job that you get will not be enough to pay off your loans, and allow you to supply for yourself compared to someone who did not have to take out any loans. The article mentioned income-sharing agreement I think it is a good Idea that graduates pay depends on their major and the amount of funding their receive. Therefore the less they make, the less they are required to pay. The graduates pay depends on their major is very interesting to me because I am not sure how that would work. It of course can prove to be a great idea but their is a chance that certain majors that have to pay more might feel like it is unfair. I do think anything that is working to help college students pay off their loans is a good thing. These things do take time though to really have the effect that they were intended to have but hopefully it move us in the right direction.

  34. Aidan Nathaniel Clee February 22, 2019 at 8:29 pm #

    Recently in class we mentioned that bankruptcy can be filed for every type of debt except student loan debt. An obvious reason student debt is so high in part because it can’t be forgiven. Another thing to consider is the fact that in our personal lives we have seen people take on college payments they know they can’t afford but they do it anyway.
    The article though discusses these new ways of paying for college and I am all for them. It is clear from the reading that Purdue is using this model for its students and if it really works well at that university hopefully others will pick it up and overtime student loan debt can be decreased significantly.
    Social Mobility can take a huge hit if the student debt crisis isn’t stopped. Soon Generation Z will be without jobs and struggling to take on the world as it says many jobs in the future wont be the same ones there are today. The article says, “With ISAs, instead of taking out loans, the student agrees to pay back a portion of his or her income for a set period after they graduate. While it protects the future of the student, it’s also less exploitative with capital interest.” This is helpful as they aren’t crushed by all the debt at once and it is allowed that there is more time to pay the debt will still having a decent job and being able to go out and participate in the economy.
    Overall a point I did think about when reading was where are the lessons on saving and picking finical stability? Students should be learning to save their money wisely in college and today that just isn’t something we see taught out brought up in many schools and this would be a big part of helping out the problem with student debt. This should be taught from a base level and the writer says that the effect of debt on the economy is something not a lot of people think of but why don’t people think about saving their money in the first place? I do see the great help Purdues system creates and it is definitely a big step in the right direction for Generation Z. Implementing this system in schools such as ours, Seton Hall; would help a great deal of kids as we take in more students with lower expected family contribution then other schools around the state.

  35. Domenico Cirielli February 22, 2019 at 8:49 pm #

    Would it surprise you if I told you that student loan debt is higher than auto loan debt? How about credit card debt? Still not convinced of its magnitude? What if I told you that there are 44 million student loan borrowers in the United States that owe more than 1.5 trillion USD? Since the recession in 2007, student loan debt has grown by 157 percent and has shown no sign of slowing down, given that tuition costs are reaching all-time highs along with student loan interest rates. Few students graduate from college with a degree that makes enough money to pay back their loans in a reasonable amount of time. Though the economy has been flourishing lately, wages have remained relatively stagnant. So, if wages are not increasing at a similar rate as student loan interest rates, what is to come of this entire crisis?

    Uncertainty – individuals are growing more and more uncertain of whether they will be able to pay back loans, oftentimes ones that amount to six digits. With speculation regarding automation and artificial intelligence in the near future, many are starting to question whether or not they will even be able to get a job, let alone earning a livable wage. This uncertainty is what led the Medium article to suggest that ISAs are to become so much more popular.

    ISA, or income sharing agreement, is essentially a contract where an individual promises to pay a party that offers he or she a good or service (in this instance a university providing education to a student) with a portion of his or her respective income once the individual graduates from college and gets a job. Not only are ISAs more reasonable than the interest rates for student loans, but also they’re progressive, meaning the less one makes, the smaller portion of his or her income needs to be given away.

    While there is much value to be found in such an agreement, I do not know how its implementation will play out (if it ever does). Again, with automation and artificial intelligence looming nearby, who knows what jobs are going to be around by the time a student graduates from college. What if the field a student was looking to operate in is completely taken over by AI? What if no new jobs exist for an individual out of college? Are students expected to pay back their respective universities if they’re not making any money out of college? While I am advocate for more affordable education, I do not propose that ISAs be implemented at this point in time because such a method designed to lessen student loan debt, might just end up creating more debt in the process.

    Overall, it is disappointing how exploitative interest rates are for individuals. Essentially, if people do not have the funds to pay for college and want to pursue a job in an industry that is not as high paying as others, then it is inevitable that they will incur student loan debt. Student loan debt can really deter individuals from having an occupation they really desire because in the back of their head they always have to worry about whether or not they can finance their education beforehand.

  36. Kevin Metz February 22, 2019 at 8:58 pm #

    The effect of student debt goes much farther than the bank account as we can tell in this article. Starting your life outside of college is as hard itself now go in with negative funds in your account, its unfair. You spend all this money to make it easier on your future and the finding a job process is much easier with that degree, but what good is that when the next 10 years of your career will go towards paying off those loans. It might make some people debate whether or not they should go to college at all. If you really think about the scenario, right out of high school you start working, salary increasing every year, and for the next 14 years of your life you have a steady income with nothing to pay accept for bills and a mortgage, seems like a better option right? Rather than heading to college and having to go to school for four years with no income then getting out of college with a hgiher paying job than our first example but really you have less money because it is going to your college loans for the next ten years. For most this is not worth it because by the time you are making some real money the best times of your life are over and you have to start paying for a family and a secondary home. Taking the college route for most is beneficial but for others it is an incredibly painstaking journey.

  37. Raymond Wilkinson IV February 22, 2019 at 9:09 pm #

    The effect of student loans debt has become a big issue for many people in todays world. After college finding a job can be quite difficult depending on how you did in college. Being tasked with the challenge of finding a job that provides you with enough income to support yourself and your student loan debt has proven to be a large issue for many. After spending all that money on school you would expect it easy to find a job as it should be. Having a degree in today’s world is a requirement. A person with a degree will find it much easier in today’s society than one without. Though that person without a degree could still have more money than the solely based on student loans. If the person has a larger income but is held back by large student loans it makes you question which side is really the better route for someone. A person that starts work right out of high school will have already begun making money and increasing their salary every year. This evidence shows student loans must be changed. Something needs to be done to fix this increasing student loan debt before going to college becomes a luxury no one can afford.

  38. Joseph Oates February 22, 2019 at 9:23 pm #

    Michael Spencer brings up a very alarming comment in his article The Next Model of Student Loans. His his article he brings up the fact that student loans are rising at an alarming rate for all. This is alarming not only for the fact student loans can be very difficult for anyone to have to deal with after graduating college, they also will have to deal with artificial intelligence taking their jobs from them. With the perfect storm hitting at the same time for all those that are graduating in the near future. With these both hitting together their will need to be some change in the way that student loans are handled.
    Mr. Spencer brings up in his article something that the University of Purdue has tried to implement. With this idea that they are trying to help students pay back the money they owe after they find a job, and they don’t pay if they are not working. This is an interesting point that they are trying to set up. To have students pay only if they find work is something that can be very troubling for a University. Some students after graduating will look for an entry level job that they might not want. The Job might not be their dream job, but they take to get into the workforce. This is their entry level job, and look to move up and get that dream job. Those will start to pay back the university the money that they owe for their time at college. Others however will cause a legal problem for the university and those that follow. I used to work at a store where I worked with two guys that both graduated from the same university, the same year. One started a new job the next month, while the other was looking for something above an entry level job. The two of them had two different ideas on how they wanted to handle their future. With the two of them following the idea of Purdue, one would have been paying back within a month. The other would have been paying back over a year later. This is a legal issue if the school has to pay its staff, and fund the school while not getting the money back from the students in a timely matter. How does this affect them with funding from the State and Federal governments?
    The other idea that Mr. Spencer brings up that Purdue is implementing is the idea of only charging based around the idea of charging college students based around what they are making from work. This could also become a legal issue as someone could feel that it is unfair that they are being charged over a hundred thousand dollars for school because they are an engineering major. While her roommate is an education major and might only have to pay fifty thousand dollars. This could become a legal issue as well for if this is based around how much you make at your starting job, how could you tell two different business majors they will owe two different amounts they owe because they found two different jobs. I love the idea of colleges trying to help their students out. Many people become scared of going to college because of the debt. However the idea Purdue has could become a legal issue not just for them, but for any college that tries to help with these ideas.

  39. Niurka P February 22, 2019 at 9:28 pm #

    Student loans are definitely a growing issue for our generation. As more students attend college, tuition increases a small percent. This percentage of an increase is meant to accommodate the fact that more students are attending their university. But what they fail to realize is the impact that higher tuition is causing their new students. These students will graduate with hundreds of thousands of dollars in student loan debt, which will be holding them back from the goals they aspire to reach after graduation. Going to college and experiencing that journey is supposed to be the start to the foundation that is your future. However, the rise in tuitions is making the process much more stressful for students now and ones enrolling in the future.

    Perdue University’s Back a Boiler program definitely has some benefits, but overall is a problematic way to go about paying back student loans. Determining the amount someone pays for their student loans based on their major and income is extremely exclusive and unfair. For example, if one student is a theatre major and another student is an accounting major, the accounting major will have to pay a significantly higher amount of money just because theatre isn’t as high with pay. Just because you pick a certain major that is in a field that you can make a high salary in, does not mean that you are guaranteed that salary. Not everything is given to you just because you have a degree from a high paying major. You have to prove that you worked hard for that money. Another problem I had with the ISA idea is the fact that the amount of money you receive in funding also decides how much you have to pay. I do not agree with this because some people barely receive funding or they receive none at all from their school. I live in a single income household, yet I still do not earn that much financial aid. It is not fair to place a set amount for graduates to pay for student loans based on funding because some cannot help the reasons that they do not get that much funding. Emancipated children or children of parents who make a lot of money do not get a lot of financial aid, so this would really hit hard for them.

    With the rise of AI and robots changing the ways that some jobs work, some job fields are starting to close or become harder for people to get hired in. If a boss can save a significant amount of money replacing Bob from the call center with an AI that can answer phones, it’s more than likely that Bob would lose his job. Technology is advancing faster than ever and pretty soon, it will advance to cut out jobs that are available for people.

    Lastly, taking a percentage of our checks is completely unfair. We should be able to decide how much we pay monthly for our student loans, not our schools. The time after we graduate is the time where we begin saving our money for our future. It would be hard to do that if a chunk of our paychecks were going back to our student loans.

  40. Janessa Smith February 22, 2019 at 10:47 pm #

    For this article, there were many issues that I agree with but I disagree with the suggested solutions for these issues. A lot of students do not have a job after graduation, so it is harder for students to pay for their loans, but I do understand these suggestions from ISA because of many payment options that a student can choose from to help with their debt.
    I do not agree with the Income Sharing Agreement (ISA). For the first scenario, nobody should have to pay for student loans based off of the students major. What if someone was an art major? A mean of a art major annual salary can vary between 20 to 45 thousand. As the economy continues to rise, it is harder to live on a salary less than 40 thousand. Likewise, some graduating students do not have a job waiting for them after graduation. So with having no job, will they have to pay student loans? This also relates to the second scenario of the ISA. The second scenario states that the less someone makes, the less they have pay. One, no job equals no money, so how can an interest-bearing student loan sit in a credit bureau and not get paid? Two, most of students defer student loans after graduation. The regulation of deferring that payment is to start paying on the loan 6 months after graduation. So with no job, there is no way that the loan would be paid for. In the article, another solution the ISA suggests is a portion of income paying for the loan at a set period. Paying a portion of a loan for a set period after graduating requires having a job. For example, having a low-paying job and trying to pay a portion of a loan would be hard, especially for someone who is living on their own. Someone would need to have a job that pays more than 50 thousand to survive while paying these lumpsomes.
    To help with student loans, students should apply to programs to help with payment options. There are student loan forgiveness programs that give many options to pay off student debt. Students who graduate don’t think about taking advantage of these programs and think of just paying the loan paycheck by paycheck. I also suggest that student loans should be claimed when filing bankruptcy. In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act. This states that student loans are not allowed to be claimed when filing for bankruptcy because people who graduated college and other programs took advantage of bankruptcy and placed student loans on the claim so student loans can be paid off and not be reported on that person’s credit report. Everything that someone wants to own has to go through a credit check. Student loans are delinquent accounts on a credit report, which is an account that has a negative effect on credit. So having student loans keeps students from moving forward in life, that is why I think student loans should be claimed in bankruptcy. If this law was never passed then student debt would not be as high as it is now and the average of debt nationwide would have a lower percentage.

  41. Goanio C February 24, 2019 at 6:52 pm #

    It is no secret that student loan debt has incredibly increased over the last two decades. It is not only harder to go to school but it is becoming more of a challenge to pay back the debt taken out for it. The system seems old-fashioned and stuck. With many factors impacting work and the future stability of jobs, stress levels for Gen Z are through the roof when searching for careers. Many post graduates are running around looking for jobs not because they are eager to begin their careers, rather fearing the inability to pay back their loans for college.

    What Purdue proposes has potential to be a step in the right direction. Someone has to try it. I have heard of a few ‘loan forgiveness’ programs but this one seems simplified and straight-forward. There is no catch to it or hidden fees. It is straight to the point and approachable. Graduates these days need options, but many have none. It is hard to distribute the blame, but society as a whole is at fault for the way the system is now. The evidence displayed in the article clearly shows an absurd, inflated debt chart that seems like it will only continue to rise. So on top of being in school for sixteen years, working towards a degree, and searching for open doors, graduates have to immediately stress about paying back their loans the day after graduation. The program at Purdue is giving their students options and comfort when discussing and figuring out their student debt.

    As a current college undergraduate student I can understand the magnitude of this situation. I have yet to begin to estimate how much debt I will be in after I graduate. Many students can relate to the reality of being in denial of how much they will owe after graduation. Yet, we are here anyway. And why is that? Not only have universities and institutions put a pretty penny on college, but students put a price on it, as well. Going into college we as students are sold on the experience and the opportunities. Coming out of college, many often realize they overpaid for what they were promised and offered. I believe it is absurd to put such a high price on an education and yet the cost continues to rise.

    Decade Repayment is a happy medium in my eyes, but a better offer than many other options. Ten years to repay loans is a solid, manageable, and realistic plan and students will be demanding an option like this from their universities across the country. Maybe there is a light at the end of the tunnel when it comes to this dilemma but results from these solution trials probably will not show for another decade or two. The price for a college degree is compensated with an experience the individual is responsible for. However, even then college tuition is remarkably overpriced.

    The stress and complications related to student loan debt have potential to impact a lot. The economy is certainly one aspect of the results that can come from student loan debt as it continues to rise in the upcoming years. The potential it has to affect the fertility rate is enough to realize that the system needs modifications immediately. Student loan debt and fertility rates should never be related in any way possible. This is evidence that our country needs to reevaluate the education system and dedicate more research towards coming up with solutions to student loan debt and repayment plans.

  42. Brandon S. February 24, 2019 at 9:45 pm #

    The student loan debt crisis in America has reached staggering proportions. Since 2004, debt has more than tripled, and currently reaches $1.52 trillion making it the second largest debt in the US behind mortgage. A standard student loan agreement is quite simple. They lend money to a student, who then uses that money to pay for school, and after graduation, is then required to pay it off bit by bit until it’s gone. Purdue University has developed a different lending model called an Income Sharing Agreement, or an ISA, that seeks to reduce the burden that student loans has created. The ISA from Purdue University is very different from a standard loan because the percentage that is paid back is based off of your major and current pay. So if you make less money, you pay less money, and if you make no money at all, you pay nothing. Purdue University seeks to put less pressure on students and parents by using the ISA system as it allows the student to agree to pay back a portion of his/her income for a set period of time and appears to be less exploitative on the students. The example given in the article; “Learn to code with no payment upfront in exchange for 17 percent of their income for two years, but only if they get a job paying at least $50,000 per year”, paints a vivid picture of what ISA’s could do for student loans and how it could be so much easier for a student to attend college at all. So many more students would be able to afford college, and parents would be less pressured to make payments as well, meaning that parents would have more money to put back into the economy, rather than spending a large chunk of their income on their child’s tuition. I think the ISA system makes a lot of sense for students and parents alike. As a student myself, I am worried about the burden that student loans will put on me in the future, and not being able to know what sort of job market to expect after I graduate, it is a big risk accepting student loans at all. I hope this payment system does well for Purdue University, and I hope it catches on with other four-year universities across the country because I realize how big a problem the student debt crisis is going to be for the country going forward and I think this is a good step in the right direction.

  43. Justin Rahl February 25, 2019 at 7:52 pm #

    I, like most people have also not realized the upcoming dilemma that student loans will most likely have on our economy. I personally am already very hesitant on spending money on things that aren’t a necessity and I am currently an undergrad at this time. With the multiple financial decisions that are to come ahead it is hard to see them as obtainable with the massive cloud that is student debt hovering over me. I can see this becoming a reality for the majority of people after they graduate however due to it not being there reality yet. Regardless this is a very large problem that needs to be addressed sooner than later. I would imagine that fertility rates, as the article suggests will see a noticeable decline as the years go forward. I do not have a child but it is obvious that having just one alone is a significant change in someone’s financial decisions from that point forward. How would people be expected to be a regular consumer of goods on top of needing to pay for the expenses of their child and pay off student loans all at the same time? It is beyond realistic to think someone would be able to thrive in this kind of situation. Being able to make ends meet, possibly, but I highly doubt the person would be fulfilling everything they would like to accomplish. Then add making payments towards a vehicle and a mortgage or rent? The numbers with all these factors present just does not add up.
    The idea brought up by Purdue University is quite interesting in regards to their Income Sharing Agreements to students. On paper it makes sense that students who have higher paying majors pay more to them compared to majors that do not have higher paying salaries. You would think having someone who is an accounting major compared to someone in the education field paying different amounts is fair and in my opinion it absolutely is. In the area of playing devil’s advocate, I can see how the people in the upper paying majors could be frustrated at paying more when they are put in the same conditions as the lowering paying majors for the duration of 4 years. It’s the same concept of arguing that the rich should be paying higher taxes than people who have less money. I don’t agree with this point of view and believe it is a shallow attempt at an argument, but can see where it could come into play during a debate. Regardless, I believe Purdue’s attempt at solving the student loan epidemic towards the economy could prove to be a noticeable impact towards incoming students and their financial obligations.

  44. John Holliday February 27, 2019 at 12:40 pm #

    I really enjoyed this article, because it had a lot of real interesting statistics and I really learned a lot. I’ve known that student loans have been increasing at a rapid rate, but I didn’t know it’s been increasing this fast. I also thought the author brought up a good point, what happens if graduates can’t find a job after graduating? If you think about the current macroeconomic status you can conclude that the economy has grown at an incredible pace the last two years, but will it continue? The United States hasn’t seen a recession in over ten years, so what happens if we enter a recession and unemployment rates spike up? If some graduates are saturated in debt and aren’t earning any income, because they can’t find a job or got laid off their debt will just continue to get worse and worse. With this being said, it’s important you understand the obligations to the loans you take out during college. It’s not smart to go to college and get a degree that is tough to find a job with and just mount up on student loans.
    Student loans is the largest amount of U.S household debt by a large margin. I was very surprised that it surpassed the amount of U.S household debt for mortgages by so much. The problem seems to be what I stated in the first paragraph; taking out loans to get a degree than not being able to find a job due to macroeconomic trends or based on the job market of your major. You obviously need to be generating income to be able to pay off student loan debt. It also doesn’t help that the price of college tuition has increased a tremendous amount. The cost for full time tuition at Rider University is $42,120 a year which doesn’t include room and board. Over four years that would amount to $168,480, which is around the price of a house in certain areas. Reading some of the comments on the blog it seems that people like to blame FAFSA, but I’m not to sure why that is. You agree to the obligations of the loan so it’s your responsibility, they don’t have to lend you anything. With this being said, we can conclude that student loans have mounted a tremendous amount over the past ten years and not being able to find a job to pay off debt is every graduates worst nightmare, which makes it important to stay in school with a major that gives you good opportunities for employment.

  45. Ashley Bock February 28, 2019 at 3:25 pm #

    The crippling fact is that American students are going to face debt post-graduation. The cost to attend a college or university is hard on any young person and now there is a new method other than a student loan to fund one’s education. This new idea is called Income Sharing Agreements and right now Perdue University is the only school that is offering this new way to pay for education. The premise behind income sharing is that when one graduates, they will sign up to pay a percentage of their income to pay back the school for their education for a set amount of years. I find this to be an interesting way to fund school. It is a necessity to take out a student loan to pay one’s college bill when most schools cost over $50,000.00 a year. Although some are financially sound to have college paid for, “Student debt has more than tripled since 2004, reaching $1.52 trillion in the first quarter of 2018, according to the Federal Reserve. In fact, it’s second only to mortgage debt in the U.S.” (Spencer). This being said is the majority of students at any school. So, the idea that when students graduate, they will start their future career with a debt over $50,000. This idea of paying states that instead of paying high interest yielding loans, there will be a set amount paid dependent on the amount of your paycheck every week. If you have a major that yields a higher paying job, you will in turn pay more back to the college. If you have a lower income job or no job at all, you will not have to pay as much or not at all. I think it might be smart to take advantage of this opportunity. The idea is that you are betting on your future to make more money and still be able to live a successful life. The money will not go to pay the high interest, usually over 10% on a student loan, but a percentage of your paycheck every week. In the end, it will allow the student to focus on thriving at school and create a successful future without worrying about the loans to pay back.

  46. Alison Schwerthoffer February 28, 2019 at 4:04 pm #

    Being in the Generation Z. group, these statistics of debt and the growing rate of automation to fill jobs is very frightening. The fact that student debt has tripled since 2004 and the number of jobs is decreasing puts the future into perspective. Your parents always told you growing up, “you have to go to college to get a job”. But now, with artifice intelligence and technology, there may not be that many jobs even with a college degree. How is it fair that institution prices are increasing when many graduates cant even get jobs to pay their bills? Many college graduates have go back to living at home for many reasons including their student loan debt, and the costs of living are too high as well, and people especially college students are not making enough to suffice for these costs.
    Income sharing agreements (ISAs) are an interesting solution to the growing problem of student debt. While the plan that people pay based on their major and job may not work, I think the plan to take 10% of income could definitely be a solution to this issue. While it doesn’t rely on a persons major and specific job it does rely on what he or she gets payed.This helps people who don’t have jobs, because there is no income to take from, and it also helps people with jobs because they won’t be made to pay more based on whether they are a historian or a human resource manager. The amount they pay is a percentage of the amount they make and I feel as though that is a fair compromise and a reasonable solution to the student debt issue.

  47. Benjamin Cherisier March 1, 2019 at 8:11 pm #

    College is a really big mental test and whether you pass all of your classes or not, you will pay back every penny you borrowed to get through it. College is a choice whether you like it or not and nobody can force you to go. If you aspire to be a lawyer, doctor or engineer chances are your college tuition is going to cost a lot of money. Fortunately, there are many options for going to college. Community college is an option which is not as expensive as a four-year program. Yes, going to that really expensive school could get you a really good job. The better schools sometimes are the pricier ones, think of it as an investment or like buying a car. If you wanted to buy a cheap car it might break down and leave you stuck in the middle of nowhere, but if you buy the more expensive car chances are you’ll get to your destination at ease and without a problem. Some people are wealthy enough to never worry a day about paying back college debt. With this idea proposed in Spencer’s article I think some people would give college another chance. I think some people are too scared to enroll in college because they are scared of failing and what if they do not get a job after college and are stuck paying debt working an average job. There is no guarantee you will get a job after you graduate. With this proportional payment idea students would not need to worry about how much they make after college and whether or not it will be enough to cover the loan payments. College enrollment would rise. On the other side it is not as realistic as you think it is. banks would without a doubt keep compounding interest onto your loan and it would be unbearable to pay within a lifetime. Even though your payments would not affect your daily life routine as much because hopefully you would have enough money to live comfortably. There is no such thing as borrowing money without interest. If you can pay it back in a reasonable amount of time good for you, and if you can’t well that’s fine you’ll just pay twice as much later. Another con of this argument is that since more people would want to enroll in college the competition for jobs would go up. In my honest opinion I think this idea is great for the people who need a little more flexibility with their loan payments.

  48. Tyler Graham March 1, 2019 at 8:31 pm #

    Student loans, at their current rate, are a danger to society. They leave college graduates fresh into the “real world” often crippled with $50,000 in debt. The graph from the article shows a dangerous reality – student loans are going up and up way faster than inflation. As a college student myself I can see the insanity of it. I pay $8,000 out of pocket per semester. I’m lucky to have the money I do, so luckily I won’t be saddled with debt, but I feel sympathy for my peers who might be.
    The rising cost of college is certainly going to have political implications in the future. Politicians such as Bernie Sanders are running on a platform including free public university. This would be a dream come true for all 18-26 year olds in the country, but accomplishing such a task might prove difficult – and is a pipe dream at best. But I predict in the next 5-10 years we will see the result of these exorbitant loans. That will take the form of lower birth rates (how can you pay for a kid if you can’t pay your loans?), lower consumer participation, and most likely even higher tuition rates.
    How can we solve an issue like this? I believe that the best way to solve this is debt forgiveness for certain majors. Obviously, forgiving the debt of every student could prove to be an unwise investment. Let’s say for argument’s sake that a liberal arts student has their debt forgiven. That is seen by many as a “useless” degree. If that person thus cannot find a job, they are contributing nothing to the economy and their forgiveness was a waste. However, if there is a shortage in a certain field (let us say Data Analysis for example), than the Federal government can offer forgiveness for students who pursue that career. Some may say that it gives the government too much power, but it is the only way I can see loans being tackled while also helping balance the economy.
    Regardless, college tuition rates need to be dealt with in some way or another. Not doing so could see an explosion of the economy comparable to the great depression.

  49. Jada F March 2, 2019 at 1:28 pm #

    The statistics that this article mentioned were shocking to say the least. Reading this and being part of Generation Z made me worried not only for my generation, who will be graduating within the next few years, but for our children when we have them and have to put them through college. When I started at Rider in 2016 the tuition & fees cost was $39,820, Now in 2019 the tuition & fees cost is $42,120 annually. The tuition has gone up $1,150 each year, it may not seem like a lot but, if the trend stays the same, by the time we have children and have to put them through college, it could cost us $200,000 – $300,000 for the 4 years which is frightening to think about. Increases in tuition would mean increases in the student loan amounts that are given out which will lead to even more debt that students and parents will have to deal with then they graduate from college.

    I think that Income Sharing Agreements (ISAs) are a great alternative to student loans. Let’s face it: not all of us are going to graduate and go straight into a career making $50,000 annually. with the ISA, students can pay a percentage of their income based on how much they are making. For students that don’t get a job straight out of college, they won’t have to pay anything. Paying off student loans can be stressful. The average student leaves college with $25,000 in student loan debt, which means that the monthly payments that they have to make would be about $280. This would be hard for some students to do especially if they are paying rent, car payments, etc. ISAs would make student lives after college a little easier as they enter the real world and are faced with many financial responsibilities.

  50. Nicholas Meyerback March 4, 2019 at 5:36 pm #

    Student loans are the principal cause for concern of many for generation Z. The student loan crisis comes as a result of rising education costs and therefore rising loan costs. According to Forbes, debt amounted to $1.5 trillion in 2018 and the average student owes more than $35,000. Likewise, the average annual tuition for a private four-year college has reached circa $30,000 (as of The College Board).

    A spiral effect of economic detriments is likely if not inevitable. To understand the magnitude of the situation, it is necessary to analyze the debit crisis on a macroeconomic level. In terms of consumption, there are multiple avenues for debt to hinder economic growth.

    Students graduating with five figures, sometimes six figures, of debt will have difficulty pursuing the goal of a fulfilling life compared to baby boomers and even millennials. Right off the bat, graduates are more likely to save their money in an effort to pay off debt as soon as possible. That means less spending on consumer goods than the millennials that celebrated their graduation.

    The next and most significant effect on consumption comes in a sector that signals a healthy and expanding economy: Home Sales. With many paying off loans ten to fifteen years after graduation, a time that normally entails starting a family/marriage, how will generation Z afford a house? Some may not have the required credit to buy a home and others may be forced to multiply their debt with a mortgage they can’t afford. If the last sentence sounds familiar it’s because the 2008 financial crisis was a product of homeowners defaulting on mortgages that they shouldn’t have signed in the first place. The consequences of a stagnant housing market are tenfold for the economy. Less home sales represents the following negative effects: poor consumer confidence, less consumption on décor/interior goods, less renovations and decreased demand for labor and capital goods (construction).

    A final impact on consumption entails the future of American demographics. With the knowledge that children will eventually lead to the burden of debt when the time to pay for college comes around, family sizes will shrink. Families are already shrinking in developed countries. According to Statista, the average family size in the U.S was 2.53 in 2018 as opposed to 3.14 in 1970. With debt looming in the future for each child, there’s an incentive to have less children, if any. What does this mean for consumption and the economy as a whole? A direct correlation between consumption and population exists. That being said, the economy will eventually adjust to meet the change in demand. However, that adjustment may be unpleasant as firms downsize and the labor force shrinks.

    With the forthcoming economic ramifications of student debt, it will be interesting to see how governments and universities respond. Will college become socialized? Will universities be forced to lower tuition costs? Maybe, the ball is in the court of the banks to decide if they want to restructure their loan model. Regardless, one phenomenon is certain, someone will be left holding the bag.

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