Student debt is an important financial concern on many levels. It certainly has an impact of the lives of students and graduates who live with the financial burden. It is also impacts our society and economy in complicated ways. Student debt rose dramatically over the last 15 years, but a recent report shows that last year there was a slight decrease in student borrowing, for varying reasons. However, now COVID-19 is adding another layer of complications to the issue of student debt.
Student Debt and the Class of 2019, a recent report from The Institute for College Access & Success (TICAS,) reports student debt for the past 15 years. It shows that for the past 15 years, from 2004 to 2019, student debt increased by about 56 percent from $18,500 average debt to $28,950. By comparison inflation during those years was 36 percent. However, TICAS reports, recently the dramatic increases in student debt have leveled off. This could be because recovery from the recession included a stronger economy, higher contributions from states for higher education and more grant aid for students.
However, other experts who study student debt say there could be different reasons for debt to have leveled off. Jason Delisle with the American Enterprise Institute thinks that students may be reluctant to take on debt. In addition, he says, there also has been an increase in parent loans and the limit for student federal loans has not increased since 2008.
Whatever the reasons for changing statistics, student debt remains an issue. “The student debt crisis persists and is projected to get worse because of the COVID-19 crisis,” said Kyra Taylor, staff attorney at the National Consumer Law Center.
The TICAS report shows that many students have problems repaying student loans, especially lower income and Black students. Black graduates have more debt than white graduates; two in five struggle to make their federal loan payment, even during a good economy. The greater impact that COVID-19 has had on the Black and low-income population means that loan repayment is even more difficult.
One of the greatest benefits employers can give their employees is student loan assistance. Students burdened by debt cannot fully participate in the economy, repaying their loans, purchasing homes or cars, or making long-term plans. Programs such as Edcor’s Freedom Loan Assistance help relieve the burden of and lessen the impact of debt. Freedom Loan Assistance has wide-reaching benefits beyond the individual graduate.
Freedom Loan Assistance, along with tuition assistance, can aid in the recovery from COVID-19. It is important that people obtain the education and training they need to qualify for jobs as the economy rebounds. Sixty-two percent of undergraduate students had a lot of concern about paying for tuition and fees compared to 25 percent before the pandemic. And many low income, minority and first-generation students are worried about paying for college and are very reluctant to take on debt. Fifty-nine percent of first-generation students were worried about being able to pay for the next term, compared to 32 percent of students who were not the first in their family to attend college.
Providing student loan assistance can be a positive step in improving access to higher education and equity among diverse population groups. Improved access and equity will help individuals acquire the education and skills they need to have meaningful employment following the pandemic. Helping individuals pay student debt will create a workforce that can engage in continual education and be prepared to meet future challenges.
By Adrienne Way, Edcor owner and CEO
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