Daily Video

May 31, 2012

Why Is There So Much Student Loan Debt?

Student loan debt in the U.S. has reached more than $1 trillion, and more and more potential college students are wondering whether the investment is worth it. Many economists say it is still worth going to college in the long run, but many of today’s students may never pay off their debts with the amount of money they make.

Although there are ways to put off making student loan payments until the borrower has enough income, the interest on the loan continues to accumulate, even when payments aren’t being made. Experts say defaulting on student loans is a terrible thing for borrowers, negatively affecting their credit and wages for years.

Some advocacy groups say the U.S. education model is flawed and needs to be re-examined, because students spend a lot of money obtaining a prerequisite for a job but can never earn enough to pay that back.

Quotes

“You go into massive amounts of debt just to get an education that you need as a prerequisite to get a job, and then spend the rest your life paying off that educational debt. There’s got to be a better way.” – Robert Applebaum, ForgiveStudentLoanDebt.com

“The massive inflation we see in tuition, in college prices, have gone up faster than health care, faster than almost any other major industry. Well, that’s a product in large part of federal student aid. If you give someone $100, you tell them they have to use it for college, and colleges know they have it, of course they’re going to raise their prices.” – Neal McCluskey, Cato Institute

Warm Up Questions

1. What is debt?

2. What is credit?

3. Why do people go to college?

Discussion Questions

1. Based on what you heard in the video, do you think going to college is still worth it, despite the debt?

2. Why did one economist make the argument that federal student aid is driving up the cost of college?

3. What are your future plans? Will you need to go to college to achieve them? If so, how do you plan to pay for it?

Additional Resources

Video Transcript

Politicians Bicker Over Fate of Student Loan Interest Rates

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