Student Loans Out of Hand

Fordham students understand that college is expensive. Current students spend nearly $40,000 each year for their annual Fordham academic experience, and even more if they live and dine on campus. This money is well-spent; nothing could be more important than an education. However, financing college education can become problematic.

Private loan practices and student debt have been major areas of contention in recent years, since the rising cost of college has been marked by rising levels of recent-graduate debt.  Stories about graduates owing hundreds of thousands of dollars abound online, and I cannot count the number of commercials I see daily advertising "fast cash" for students.  It would appear that student debt has become a pandemic, and everyone is searching for a cure. 

One area in which some people see hope is government regulation of loan practices.  In 2007, The New York Times reported outcry against university financial officers receiving payment from lenders for recommending their services to students.  These payments took the form of travel and entertainment gifts in addition to staffing for college aid offices.  In response to these revelations, the government modified its framework for granting loans and required colleges and universities to include at least three lending institutions in their recommendations to students; however, these modifications were only applied to federal loans.

While these efforts may have added some degree of transparency to the loaning process, I propose a solution to this debt crisis that has the potential to wipe out the problem entirely: people must stop borrowing money that they do not have.  Yes, each and every student wants to graduate from a prestigious school that can open doors for his or her future, but is it worth the cost?  Should people be trading four years of collegiate bliss for a lifetime of financial dependence?  These are questions that too few students and parents consider during that grueling college application process, and it needs to change. 

On a personal level, devoting over $100,000 of a student's future earnings before most people even know what major to choose is just ludicrous, especially when there are so many alternatives for students.  Community colleges are respectable and cost-conscious resources that can get students on their way to a four-year degree at a fraction of the cost.  State colleges and universities also cut down the costs of a college education monumentally.  Students should not feel the need to subject themselves to a lifetime of debt when these affordable alternatives exist.

On a social level, if more students were to invest in community colleges and state universities, then the price of private tuition would be driven down. Currently, private universities are in such high demand that they can afford to charge monstrous rates,  and when they need more money, all they have to do is raise tuition and students with newly granted $50,000 loans will be able to pay. 

If we were to lower the demand for private universities by utilizing community and state colleges, private universities would be forced to become more efficient with the money they have and find innovative ways to lower costs.  Right now these universities have no incentive to be cost-conscious or resource-efficient, but decreasing the demand for them – maybe even encouraging students to go abroad or get a job before heading to college – will result in more economical operations and lower tuition.  This will result in fewer students taking on financial debt that they cannot support, since college will be more affordable. 

There are two possible solutions to this debt crisis facing many college students and graduates: one that relies on government action, and another that relies on student responsibility.  While the government might be taking admirable steps to alleviate the problem, I challenge every student to make economically intelligent decisions regarding student loans that will benefit them as they graduate without debt and as they move forward in life.  Good decisions now can inspire monetary independence upon graduation and foster positive financial habits throughout the rest of their lives. 

Christina Barreiro, FCRH '12, is an international political economy major from Westchester County, NY.