To better understand why this issue is labeled as a “crisis”, we began to read stories and case studies regarding individuals whose lives were impacted substantially by the financial burden that arose from their student loans. Looking through websites such as consumerreports.org and studentdebtcrisis.org, it was easy to find countless examples of people whose lives and families were destroyed as a result of their student debts. A common theme we quickly discovered from these stories is borrowers not being fully aware of the structure of student loans, and private loan companies taking advantage of students’ lack of understanding in order to accumulate extremely high interest rates from the students. Students who fail to keep up with their payments end up paying significantly more money back to the loan companies, and in many cases, borrowers build up so much interest that they have to pay monthly payments for the rest of their lives.
While this business practice used by the loan companies may be morally wrong, the root cause of this is not a result of malicious behavior from these companies, but rather a market opportunity to create profit. Basic economics teaches us that where there is an opportunity to earn economic profit, new firms will continue to enter the market and existing firms will have incentive to expand their business. The rapidly-growing demand for large student loans has allowed these private companies to enter the market and supply that demand, while federal student aid has lagged behind the rising tuition costs.
Student loan debt has become the second most prominent form of consumer debt in the United States, even surpassing credit card debt. The issue is the rate of serious delinquencies, which for student loan debt reached 9.6% in 2017, more than double the serious delinquency rate for credit card debt.
While our group members are fortunate enough to have learned skills in budgeting and managing money while growing up, however this is not the case for a large portion of the population. The student debt crisis has occurred as a result of people not because they are unintelligent, rather it is because they are teenagers and young adults who have not had the opportunity to learn the fundamentals of how banks, loans, and interest rates work. These are people who study at all types of institutions, working to obtain two-year degrees, four-year degrees, or even up to master’s degrees and doctorates. There are many examples of teachers, nurses, and therapists who have especially been burdened by the crisis due to needing more than one degree for their careers.
Few citizens would disagree with that notion that those who dedicate their careers to teaching our children, attending the sick, and counselling the mentally ill should not be burdened by a lifetime of debt. However, it also would not be a well-supported public policy for the government to use the money we pay in taxes to bail out young adults who are unable to pay off their loans.
When discussing hypothetical solutions to the high default rates, we agreed that federal government loan forgiveness programs are both ineffective and inefficient. These types of programs can only make the issue even worse, because they increase the demand for high-interest student loans by providing lower risk to the borrowers. Benjamin Franklin once stated, “An ounce of prevention is worth a pound of cure”, and this statement remains very relevant to this day. Another common theme we found from the stories of individuals was that many of them regret going to college and regret not understanding the specifics of their loan agreements before signing the papers. This pattern is a major reason behind the high default rates of student loans. With all of this in mind, our group was able to agree that state and federal government-mandated programs that educate high school students on personal financial management could be the perfect “ounce of prevention” to reduce the immense amount of loan defaults plaguing our society today, and therefore avoid the destruction of so many young people’s futures.
We titled our podcast “The Student Debt Epidemic”, with our recording being the first episode of the series. We used this strategy to emphasize the magnitude that this issue brings to our society. We added that this recording is merely the first episode of an entire multi-season series revolving around this important problem, showing that the extent of this issue requires more than just one podcast episode in order to uncover. In addition, we used the word “Epidemic” in our title, showing that this problem has widespread consequences throughout the country.
For this episode, we decided to narrow our topics of discussion to the following: The history of rising tuition costs and how that has led to the large increase in demand for student loans, the affects incurred upon diversity and opportunity, the root of high default rates for student loans, the impact these default rates ensue on students’ lives, and how all of this affects us as students at Fordham. We use concise language backed with statistics in order to give listeners a clear understanding of the issue and it’s origins. Our goal is to inform listeners on the fundamental characteristics behind how and why this issue has become so immense in such a short time period in history.
We implemented styles and structure that are often seen in popular podcasts, such as instrumental background music, consistent speaking volume and tone, and by providing statistics and insight on both a national level and a local level here at Fordham.