The student loan debt in numerous United States homes has constantly been surging. Its consequent debt burden has resulted in adverse impacts on diverse life aspects, such as household living standards, wellbeing, and health. The completion of a college education offers more significant earnings and job opportunities in the United States. For instance, a university education is perceived as a vital component of the American dream, offering graduates the chance of attaining economic prosperity. However, recent studies have ascertained that advanced degree and college education have significantly contributed to the rise in student loan borrowers, prompting a surge in student debt. Besides, numerous student borrowers are fiscally impoverished due to the debt owed. Whereas there have been proposals by some US federal government congresspersons to enact legislations that forgive and cancel student debts, the bills have been systemically rejected in the past. The high US student loan debts negatively impact the students’ homeownership, living standards, wellbeing, health, economic prosperity, and life satisfaction in the long-term.
The rising costs of living coupled with unemployment after graduation prompt numerous graduates to default from their student loans, predisposing them to face economic and legal problems. The approximated US student loan debt was $1.3 trillion in 2017 (Kim & Chatterjee, 2019). Besides, there is a rising concern of a looming loan crisis if the rapid surge in student debts is not effectively addressed. Bearing in mind the surging number of individuals enrolling in colleges in the US, the suppressed access to grants that foot college expenses, and the swelling university education costs, the student debt has significantly risen. Besides, in 2015, approximately seven in ten graduates had an active loan debt, averaging $30,000 per student (Kim & Chatterjee, 2019). Additionally, in 2014, 11.5% of the students who had commenced their repayment plans defaulted (Kim & Chatterjee, 2019). Considering that approximately 33% of the student borrowers defaulted from their loans, it is safe to establish that most of them are currently suffering to repay their student loans (Kim & Chatterjee, 2019). Besides, students who have not repaid their loans are less likely to secure well-paying employment due to their negative reputation to creditors.
The fiscal stress that comes with the responsibility to repay the student loans can prompt negative psychological and health impacts. It is perceived that the financial stress experienced by persons elaborates their perceived mental illness and resultant detrimental behaviors such as binge drinking and smoking. Researchers establish that student indebtedness can prompt the acquisition of mental challenges and mediate connections between mental illness, low-income, and poverty (Kim & Chatterjee, 2019). Besides, a meta-assessment of individual unsecured health and debt established that high debt burdens are linked to adverse health outcomes, for instance, psychotic challenges, substance abuse, excessive drinking, suicide or attempted suicide cases, anxiety, and depression. The increased mental illnesses also have negative economic impacts on the students. For instance, the graduates are less likely to advance in their education at masters’ and doctorate levels due to fear of getting more mental illness, which mitigates their competitiveness and likelihood of landing into a managerial position. Consequently, the fear of mental illness compels the graduates to settle for less paying job positions, which dents their upward financial mobility.
The student loan debt negatively impacts graduates who intend to own their own homes. For instance, adults aged between 18 and 35 years are predominantly putting up with their parents, and fewer young people own homes than the previous lots that graduated in the past decades (Velez et al., 2019). According to the Federal Reserve researchers, there has been a 20% reduction in homeownership in the United States, which is predominantly facilitated by an elevated student loan debt (Velez et al., 2019). Consequently, the financial burden that comes with high student debts predisposes university graduates to low living standards. Furthermore, student loan debts suppress the rate of home purchases within five years after graduating. The obligations to repay the loans inhibit the budget flexibility that could enable households to save for home purchase deposits. The mortgages also make it challenging for homeowners to access homeownership mortgages by elevating the debt-to-income ratio. Since numerous students from minority groups struggle with loan repayment, they possess a negative credit history, which increases their disqualification from mortgages.
Student loan debts have negatively impacted students’ financial choices and educational success. For instance, student loans have been closely associated with suppressed levels of college consistency as well as elevated dropout cases. In the country, reduced educational loan levels have been connected to positive college completion rates. For instance, loans exceeding $10,000 suppressed college education completion rates compared to fewer student loan debt burdens (Kim & Chatterjee, 2019). Additionally, once employed, graduates are compelled to choose different career choices, which may be less-paying since they have to repay their borrowed loans to avoid unnecessary penalties. Graduates having immense loan debts mostly avoid careers in public service, for instance, social welfare, public administration, and education, and instead opt for higher-paying work (Kim & Chatterjee, 2019). Whereas some might be lucky to land high-paying jobs that do not match their career choices, most of the graduates end up unemployed for significant periods and miss out on the necessary career experience. Consequently, the students are predisposed to long-term unemployment that increases cases of social crimes and drug trafficking.
High student loan debts also negatively impact the marital life of college graduates. In particular, the high level of student loans is negatively associated with a low probability of entering into the first marriage. The financial pressure of repaying the loan debts, the difficulty in footing bills such as rent, water, laundry, and the extra expenses that accompany marriage, for instance, weddings and financial companionship inhibit graduate marriages (Velez et al., 2019). Additionally, high levels of student loans increase the mental stress in the borrowers, which prompts psychological challenges, including depression, anxiety, and aggression, and inhibits them from getting into serious relationships. Likewise, the mental stress obtained from high student loan debts predisposes the graduates to drug abuse and violent behaviors that either discourage them from entering into marriage or prompt premature breakups in romantic relationships (Velez et al., 2019). Consequently, the low marital rates result in less committed youths who are not held accountable by spouses. Instead, they are free to engage in practices that might jeopardize their upward economic mobility.
Furthermore, the rising student loans reduce the enrollment in higher learning institutions, which suppresses the educational outcomes and number of potential skilled personnel. For instance, individuals who emanate from minority and marginalized communities become skeptical of taking student loans since they have a minimal financial capacity to repay the taken loans (Kim & Chatterjee, 2019). Consequently, a significant number of students from low economic backgrounds shy away from joining the tertiary institutions and instead opt to indulge in unskilled labor, which in turn diminishes their potential economic growth. As a result, the high student loan debts perpetuate the low education and poverty cycle among the marginalized minority populations, for instance, the people of color. Furthermore, the suppressed student enrolment rates resulting from the high student debts widen the income inequality between the rich majority and the poor minorities (Kim & Chatterjee, 2019). This can be perceived as ironic since education has been predominantly perceived as the platform that bridges the gap between the poor and the rich and empowers the low-income populations. Against this backdrop, student loans tend to result in more harm than good by suppressing the university entry rates for the minority populations.
The student loans further facilitate financial distress to the households from which the students emanate from. For instance, a 2007-2009 research assessed the relationship between household financial distress and educational debt and established that households exhibiting student loans are likely to plunge into financial crisis (Kim & Chatterjee, 2019). In particular, these households tend to repay loans late, exhibit high debt than income, are denied other loans, and encounter bankruptcy or foreclosure. Consequently, they are less likely to get into well-paying jobs that can boost their livelihoods and facilitate their upward economic mobility. The increased financial strapping of the entailed households worsens the poverty cycle and slows down the regional and national economic growth. This negates the role of education as an empowerment tool for low-income households in the United States.
Additionally, the existing income-driven repayment structures for student loans are complicated and do not effectively ease consequent financial burdens. Income-driven repayment programs are developed for graduates whose income is not substantial enough to repay loans under the standard framework (Velez et al., 2019). However, the income-driven approach depends on the family size and income, limiting its comprehensive effectiveness. The lack of effective loan repayment structures is detrimental for student loan borrowers since they struggle to remain financially stable after graduating, even if they get into employment (Velez et al., 2019). In this regard, it is incumbent upon the state and federal lending authorities to improve the present income-driven framework to enable all student loan borrowers to repay their loans irrespective of their socioeconomic backgrounds.
In conclusion, the high US student loan debts negatively impact the students’ homeownership, living standards, wellbeing, health, economic prosperity, and life satisfaction in the long-term. The rising costs of living coupled with unemployment after graduation prompt numerous graduates to default from their student loans, predisposing them to economic and legal problems. Furthermore, the fiscal stress that comes with the responsibility to repay the student loans can prompt negative psychological and health impacts. Moreover, the student loan debt negatively impacts graduates who intend to own their own homes and is a major reason for declining homeownership rates in the United States. Additionally, the existing income-driven repayment structures for student loans are complicated do not effectively ease consequent financial burdens. Student loan debts have also negatively impacted students’ financial choices and educational success. Besides, high student loan debts also negatively impact the marital life of college graduates and suppress the number of students who get into marriage within the first five years of their relationships. The student loans further facilitate financial distress to the households from which the students emanate and reduce their enrolment rates into universities.
References
Kim, J., & Chatterjee, S. (2019). Student loans, health, and life satisfaction of US households: Evidence from a panel study. Journal of Family and Economic Issues, 40(1), 36-50.
Velez, E., Cominole, M., & Bentz, A. (2019). Debt burden after college: the effect of student loan debt on graduates’ employment, additional schooling, family formation, and homeownership. Education Economics, 27(2), 186-206.