A recent article “Middle-aged borrowers piling on student debt” indicates individuals between the ages of 35-49 are amassing significant student loan debt as men and women enroll at postsecondary education institutions, mainly for-profits institutions, due to midlife career changes (Lipka, 2011). Student loan debt for the middle aged group has increase 47% with the average student loan debt increasing from $9,000 to 12,000. The article emphasizes the individuals seem oblivious to the fact that in many cases the retraining may not sufficiently provide the income level needed to repay the massive amount of student loan debt the person is accumulating.
The article has some very valid points concerning middle aged borrowers amassing significant student loan debt as they enroll at postsecondary education institutions. However, there are other economic factors that are contributing to the increase in student loan borrowing such as the loss of government subsidies. Many middle aged individuals have been laid off due to downsizing and forced to seek government assistance to cover their basic living expenses either through unemployment or TANF benefits. Recent state and federal legislation has impacted the unemployment and TANF programs causing many individuals to be ineligible for benefits. The unemployment and TANF benefits were the only source of income for many individuals because of the high unemployment rates and lack of job opportunities. Therefore, these individual have been forced to seek other means of support, student loans, even if the solution is only temporary.
While the mid-life career change may seem to superficially be the logical reason for the student loan debt increase, the loss of government subsidies is one of the imminent reasons many individuals enroll in postsecondary education institutions. Student can obtain subsidized and unsubsidized loans based on their economic status rather than their credit scores which alleviate the humility of the credit scrutiny of banks that will deny their loan applications because of their lack of employment. The student loan program allows the student to borrower the maximum amount of student loans funds available (in most cases)to cover their tuition and allow for a refund to be able to meet their basic needs, such as food and shelter, because they do not have any other means of support. The student is not concerned about paying the student loan funds back in the future; they are more concerned with their present situation and being able to maintain their standard of living.
From a financial standpoint, borrowers should be concerned about their student loan debt accumulation because it will definitely impact their student loan repayment responsibilities once they finish their education. However, at the same time, for many individuals the loss of employment and lack of income has already has so many adverse affects, such as foreclosure and lack of economic dignity, that the future consequences of not being able to repay their student loan pales in comparison. The borrower credit scores are already low due to not being able to pay their current debts and therefore, the “scare” of the student loan debt burden seems inconsequential. For right now, there is no short term solution for the middle aged student loan debt increases because it is a result of the recession that has caused the borrowers to seek student loan funding as a source of income rather than a source of education. Until the employment outlook becomes better, the amount of middle aged student loan debt will continue to increase.
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ReplyDeleteAs far as people using school as a way to live...I see this in a lot of students that attend my university. As you know I attend Univ. of Phoenix and there is a large population of over 30 y/o students. Most of the ones that are unemployed survive off of student loans. I personally have a friend who right now owes the university about $12,000. The thing is that the students need to make sure that they are mentally ready to go back to school.In my friend's case she wanted those overpayment refunds to help out w/ bills but she wasn't making good grades in her clases. And even after being put on academic probation, she still could not stay focused and was failing b/c she had so many other problems going on in her life at the time. So students should really learn to be careful and make decisions like this very thoughtfully. After all these debts follow you. Unfortunately, these student loans are not able to be discharged even under extenuating circumstances or even in bankruptcy.
Hope you can revisit that Chris Brown/Rihanna discussion in light of what some other singers/entertainers had to say about his past bad behavior and still being able to perform at the Grammys. Even though, he has cleaned up his act and has tried to reconcile (looks pretty promising lately) w/ Rihanna. Just curious what your thoughts are on this?
Good Luck w/ your blog site Mari!!!!
Nice One
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