Term Paper on "Student Affairs"

Term Paper 14 pages (4376 words) Sources: 5 Style: APA

[EXCERPT] . . . .

Student Affairs

One of the most important links for success in the upcoming decades for the U.S. is higher education. Its not only beneficial for the country at large but it is what differentiates the average from the well-off or successful as a higher education degree can almost guarantee earnings totaling to more than $1,000,000 over a lifetime and is clearly valued more then the normal high school degree. The downside in the American society in current times is that the overall academic expenditures for higher education are leaving the students under heavy student debts (King and Bannon, 2002).

A whopping 40% of the students that graduate with a higher education degree have an unbelievably high debt that mainly leaves them in dire states as the monthly revenue is 8% less then what they have to monthly spend in returning the debts, utilities, etc. The Department of Education's National Postsecondary Student Aid Study (NPSAS), in one of their recent reports highlighted that with the rise in expenditure for getting a higher education degree in the last two decades, more and more students are relying on student loans to help them cover their tuition fee, and hence the amount of debts are increasing speedily. Another study showed that a surprising 64% of the graduates will be indebted with students' loans by the end of 2009 and that these loans will have more than doubled to approximately $16-17000 by that time (King and Bannon, 2002).

The most common denominator found here is that the students who had financial troubles before or after graduation were the ones who were left with heavy student debts. The fact of the matter is that students who have unsteady financial backgrounds have limited options of getting financial support and normally have to support their families after they have graduated. A study conducted in 1999-2000 confirmed this as by the end of the year 1999 44% of the graduates with student debts were from families with annual earnings of nearly $100,000 or more and nearly 71% of graduates with student debts were from families with annual earnings of $20,000 or less (King and Bannon, 2002). Also, there are certain groups of students that face heavier students' debts then other groups like the Hispanic (58%) or the African-Americans students (55%) (King and Bannon, 2002).

Recent history of the student debt

There have of course been numerous improvements made in the past decade in the student loan procedures (like a reduction in the default rate), there are, nonetheless, severe glitches in the overall system. The improvements made have merely been a result of the new centralized system that has been setup. The default rate, for instance, in 1990 was a whopping 22% where the student loans were allocated a total of $13 billion. But if one takes in account the statistics from then till now we see a clear pattern of student loans increasing in number while the default rate decreasing in percentage. The difference became so wide that by the end of 1998, the student loan amount was up to $38 billion. If this continues, the country might witness another record making default rate (Fossey, 1998). Another concern is that the students with rising demands of everyday life and business are finding it harder and harder to manage their debts; this could increase the default rate back into the late-teen percentage as opposed to the 10-11% it is at now (Fossey, 1998).

The government has changed its loan giving procedure in the recent years which has been a leading cause for the rise in concern of repayment. Previously, students received finances without interest for their academic years. Now more than 1/3 of the students receive subsidized loans that have increased with the added interest during their academic years. This simply means that a student who had received subsidized financial loans had to pay interest in addition to the finance borrowed to pay for the tuition (Fossey, 1998). This is of course not helped by the fact that more students are now dependent upon the student loan system and the amount of loan that they are borrowing is a lot more than what students of the previous generation had borrowed. A study conducted by General Accounting Office (GAO) showed that by the end of the academic year of 1992-93, the total student loans borrowed by college graduates amounted to a total of $10,000 which was 30% less then the total of $13,000 that the graduating students owned by the end of the academic year in 1995-96 (Fossey, 1998). David Campaigne and Don Hossler, in one of their recent studies, supported that the revenues generated and the debt owed was not on equal turf for most graduating students and that the overall debt ratio between 1985 and 1991 grew from 6.23% to 9.52% of total earnings (Fossey, 1998).

One of the recent solutions brought forth by the congress was that the student loans can be repaid over an extended period of 25 years. This, while on the surface seems to help the students handle the burden a lot better and does decrease the default rates, in effect it actually is increasing the amount of money that will be repaid as the more years that are taken up to repay the debt the more interest will be added to the total amount (Fossey, 1998). This glitch is not the only reason that the 25-year repayment period is futile. When considering the practical side of things, the fact still remains that the students opting for the 25-year repayment period might have to repay their students loans right into their middle age; some might even have to continue paying off their student debt after they have retired from regular work (Fossey, 1998).

The GAO carried out another analytical report in 1997 and showed tremendous concerns for the student loan program, its administration and structure and referred to the student loan section as a "high risk" zone. It highlighted some of the most drastic faults in the overall setup and went on to conclude that "the financial interests of the U.S. taxpayers are not well served (Fossey, 1998)." The report also highlighted some of the most obvious fraudulent and negligent elements in the program especially in the loan structure of the proprietary school segments. Negligence or inefficient work was also one of the main highlights of the report as they pointed out that more often the disqualified or evasive students were given loans without any logical reason to back up the action (Fossey, 1998).

One of the main shortcomings that were highlighted in the GAO report was the lack of efficient and updated facts and data on the overall procedure of providing student loans and/or keeping a record of the student loans given. The report pointed this out a lot more then any other problem and also went on to say that this level of inefficient and undependable record was one of the main reasons why the U.S. Department of Education was having problems coming up with accurate academic and student loan costs. Also, the report highlighted that the Department of Education had no way of checking for the authenticity of any of the cost details given to them (Fossey, 1998).

Other obvious flaws in the program that have helmed the increase in the percentage and amount of student loans are: one, the design of the loan scheme puts all the financial burden on the central authorities hence the loaners don't feel a need to reduce the default rate; two, the loans are mainly given to the students who have unsteady financial backgrounds or attend proprietary foundations. It would be unfair to say that the Department of Education has turned a deaf ear to these concerns but the fact of the matter is that they are not coming up with effective and successful solutions for the problems aforementioned (Fossey, 1998).

The parameters of the current dilemma

The most recent predicament is that the higher education debt is not the only one that is increasing speedily, the overall secondary academic expenditure is also increasing at a swift pace. Nellie Mae Corporation is one of the most successful student loan providing corporations in today's time. According to their analysis the overall student loan after graduation is between $18-19,000. Their analysis shows that the overall figure of student loans increased by a whopping 66% from 1997 to such a high number after the loan-inclined student support became the main source of college funding instead of the grant-inclined support. The downside is that secondary or college graduates who go through such high debts do not earn as much as a higher education graduate does and hence they find it even harder to repay this debt (Franke-Ruta, 2003).

These insane level of debt ratios have transformed the average American in the 20s and 30s of today's time from being merely adventurous, aspirating leaders and corporately risky to tackling inflexible, unsatisfactory careers and worrisome finances. One of the victims of such… READ MORE

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