America’s Growing Student Dept Crises

The student loan dept crises has continued to form into nationwide bubble.

Student's dept crises

Money has always been the core issue of man, he never has enough and is always seeking ways and means to get more and more. Many resorts to criminal activities which are short lived and lives are destroyed.

Then there are those who believe in taking risks in an honest manner and invest their money in bonds or shares or other profit making ventures.

People play the lottery and win big at times but that rarely happens once in a blue moon.

Then there many who have lost their life savings to money making scams such as the Ponzi scheme or pooling a fixed shared amount and giving one person the total and to others on a monthly basis with a fixed duration of two years .

All investments made by one own money is acceptable but it is wrong when people use company money to invest in getting rich schemes.

There are many institutions all over the world which is short of funding and constantly on the look out to make more.

Schools, colleges, hospitals, religious institutions NGO s, government organizations also are in need of money.

Many organizations invest in bonds or shares and get reasonable returns on their investments.

The greatest money making the market in the world is New York City’s Wall Street where the entire world descends to make that extra buck.

Arab Sheikhs, Russian tycoons, Chinese entrepreneurs, emissaries of corrupt politicians all come to the epicenter or motherlode of money.

While everything is acceptable in this money market there are some investors who are taking great risks using their institution’s funds which actually is not only risky but rather unethical also.

The U. S. education sector is very much involved with Wall Street these days.

The Education sector is becoming highly financialised and increasingly taking risks in wall street placing its priorities on money rather than turning out highly educated students.

In a detailed survey conducted by the Roosevelt Institute disclosed that non-profit private and public colleges are also investing their money in Wall street at great risk to their academic institutions.

Even Ivy League schools such Harvard and Columbia have joined the bandwagon along with smaller community colleges and state schools.

An estimated sum of 2.70 billion dollars has already been used up by these institutions money that could have been used to pay tuition and school fees of 108,000 students.

The money lost or squandered will be made up by charging student increased fees. It is also being said that these schools will have to cough up an extra in order to get out of the bad derivatives deals, schools would have to pay an estimated $808 million in penalties to lenders.

The question arises as to why such schools cut risky deals in the market that brought down public governments in places like Detroit?

Many attribute the reckless and expensive business ventures to the fact that state funding for colleges and schools has drastically reduced in the last twenty years.

The need to fund students to pursue there is not the only reason these institutions need money. According to the Roosevelt, studies points out.

 People gather in front of Widener Library on the campus of Harvard University, in Cambridge, Mass.
People gather in front of Widener Library on the campus of Harvard University, in Cambridge

Butt as the Roosevelt study points out it seems “an amenities arms race,” is on which colleges are trying to enroll rich students to enable them to build greater facilities like students center ends by building fancier facilities, students centers, and luxurious housing.

In a separate study, Charlie Eaton, a University of California-Berkeley sociologist, and his colleagues found that only about 25 % of all interest payments on debt being made by schools were for investments in classroom construction or other instruction related projects.

New stadiums, cafeterias, and recreation centers are being constructed which has resulted in heaving borrowing.

The majority is going to build things like new stadiums, cafeterias, and rec center. All of this has resulted in a huge borrowing boom amongst colleges and universities – between 2003 and 2012, per student spending on debt interest payments increased 45 % at public colleges, 23 % at private colleges and an eye-popping 76 % at community colleges.

The United State is one of the richest countries of the world and has some of the greatest learning institutions in the world and hundreds of thousands of students go to the States from all over the world to live and study in order to get an American degree so that they can either live on in the States or go back armed with an American degree which has its worth in gold back home.

In the least developed countries of the world, the state of education is abysmal, to say the least.

Schools and colleges do not have the luxury of having millions in their coffers to fund education and only the children of the elite get to have a quality education.

In a country like Pakistan, only 2 to 4 percent of the budget is used for the education sector and quality education in the rural areas is virtually non-existent.

Schools and colleges do not have enough funds to invest anywhere unlike in the United States.

There is another crisis looming in the Education sector in the USA and that is the rising student loan debt crisis.

Students in Dept Crises
Student’s Dept Crises

Nearly 70% of bachelor’s degree recipients leave school with debt, according to the White House, and that could have major consequences for the economy.

Research indicates that the $1.2 trillion in student loan debt may be preventing Americans,from making the kinds of big purchases that drive economic growth, like house and cars, and reaching other milestones, such as having the ability to save for retirement or move out of mom and dad’s basement.

This Student debt crisis has become so huge it’s even captured the attention of presidential candidates who are searching for ways to make college more affordable amid an environment of dwindling state funding for higher education and rising college costs. But meanwhile, the approximately 40 million Americans with student debt have to find ways to manage it.

Over the past few decades, a variety of factors coalesced to make student debt an almost-universal.

American experience. For one, state investment in higher education dwindled and colleges made up the difference by raising tuition. At the same time, financial aid hasn’t kept up with tuition growth.

In the 1980s, the maximum Pell Grant — the money the federal money gives to low-income students to attend college — covered more than half the cost of a four-year public school, according to The Institute for College Access and Success, a think tank focused on college affordability. Now, it covers less than one-third the cost.

A college degree has also become more necessary than ever to compete in today’s workforce at the same time that Americans’ wages have remained stagnant. That means more students are going to school with less money to pay for it, resulting in an uptick in student debt.

The boom in for-profit college enrollment during the Great Recession has also served to boost aggregate levels of student debt and student loan defaults. For-profit colleges have come under scrutiny from lawmakers and consumer advocates who accuse them of using inflated job placement and graduation rates to lure students into enrolling and taking on loans.

A September study published by the Brookings Institution found that a large share of the growth in the number of students struggling to pay off their loans over the past several years is tied to students borrowing to go to for-profit schools and to a smaller extent two-year community college.

Other, factors likely also play a role in the growth of student debt. Many have blamed the uptick on college costs and therefore student debt on administrative bloat, the idea that colleges are spending more on nonacademic staff and facilities. In addition, many 17-year-olds likely don’t understand what owing tens of thousands of dollars in loans will mean after they graduate.

Cost of Degree
Cost of Degree

One can just imagine if the United States has such a monumental crisis with regard to student loans and institutions investing in shady deals to make money.

So what is the future of the American Education sector? Will it collapse under the burden of its own financial debts or will it survive the odds?

Without money as mentioned, the going can be tough for as everything education one is nothing and if the US education system collapses then god help us all.

Third World countries have a difficult time feeding, clothing and sheltering people and for many education is a dream and yet life moves on.

It is expected that the US will survive its education loan crisis by restructuring its loan services, with prudent spending. With a new government coming to power change is expected and the American leadership really cares about its people and will definitely bail the education sector out.

No matter what happens the world will be looking for quality education from the United States only.

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