Student Loans in America

Abstract

As a prospective university student, student loans will probably account for a significant portion of one's financial obligations throughout higher education. Its primary objective is to enable students to focus exclusively on their studies without having to work part-time to cover living costs, tuition, books, or other needs necessary to sustain a modest lifestyle. Tuition (annual fees), particularly for universities, has been increasing globally, most notably in developed countries, with a statistical estimate of a 1.6-times increase in actual monetary value (Digest of education, 2006), owing to the fact that university personnel salaries and benefits typically increase faster than inflation ('Baumol's cost disease'). As a result, education plays a critical part in society's functioning. It allows individuals with the ability to nurture new members of the labor force to tolerate higher prices with the aim of financing a solid education investment. With postsecondary education playing such an essential role in many people's lives, it's unsurprising that many students take out loans without giving it much thought. Student loans impact nearly 44.7 million debtors in the United States alone, with a total outstanding debt of over USD 1.71 trillion.