Federal Student Loans Should Be Abolished.

I will separate my arguments into 5 sections so as to make them more structured. Federal Student Loans Have Caused an Education Bubble Over the past few decades, tuition has skyrocketed inside the United States. Between 1978 and 2012, the tuition in the US has increased 1210%, or 12-fold. (1) This is also 4 times faster than the increase in the consumer price index. This is obviously a huge problem, so the first steps we must take to come up with a solution is to look for the cause or causes. Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University, stated that "The basic problem is simple: Give everyone $100 to pay for higher education and colleges will raise their prices by $100, negating the value of the aid. And inflation-adjusted aid--most of it federal--has certainly gone up, ballooning from $4,602 per undergraduate in 1990-91 to $12,455 in 2010-11. As it did in the housing market, free or reduced priced has artificially inflated the price of college education. Thus begins a classic upward price spiral caused by government intervention: Subsidies raise prices, leading to higher subsidies, which raise prices even more. Yet this higher education bubble, like the housing bubble, will eventually pop. Meanwhile, large numbers of students will graduate with more debt than they would have in an unsubsidized market. "(1) Patrick Hedger, a policy analyst from FreedomWorks, found that “Students are taking out cheap loans as liberally as colleges spend their tuition. With money readily available at low rates to anyone who asks, students never think twice and colleges have no incentive to keep prices low. The end result is tens of thousands of dollars worth of each student’s tuition being spent by universities on superfluous things designed simply to draw more and more students and their government-backed blank checks. "(2) Federal Student Loans Have Cause a Rise in Tuition As a result of the Education Bubble, tuition has been artificially inflated through government intervention. Chris Edwards, from the Cato Institute, explains that “It is a matter of supply and demand. More and more Americans have sought a college education which has pushed prices higher. Ordinarily, such upward pressure would be restrained by consumer willingness to pay, but as government subsidies have helped absorb tuition increase, the public’s budget constraint has been lifted. ”(3) Peter Wood, a professor at Boston University noted that federal subsidies “are seen by colleges and universities as money that is there for the taking … tuition is set high enough to capture those funds and whatever else we think can be extracted from parents. (4) Federal Student Loans have Harmed Students Not only do student loans cause a rise in tuition, they also harm students various ways. A. Cause Unemployment In 2012, about 1.5 million, or 56%, of bachelor’s degree-holders under the age of 25 last year were jobless or underemployed, the highest since in of least 11 years. (5) How could this have happened? Patrick Hedger explains "“Federal student loans, which are soon to be the only education loans available, severely up start the market and are directly responsible for the surge of under-and unemployed youths with bachelor’s degrees. ” B. Students are Negatively Impacted by Debt The American Association of State Colleges and Universities found that “Students often see higher education as the primary path to upward mobility, but when they accumulate excessive debt, this pathway quickly becomes riddled with pitfalls. Students graduate with debt may put off life milestones such as buying a car, owning a home, getting married, or entering certain low paying professions like teaching or social work. ” (6) Also from the AASCU, “Particularly worrisome is that the number of college graduates with $40,000 in student loan debt has increase 10-fold in the past decade. Those numbers pose long-term threats to recent college graduates lifelong decisions, but the financial future of borrowers who do not earn a degree is even bleaker. ” C. Student Loans Harms Students' Credit Score Student loans also put many students at risk of ruining their credit score if they fail to pay off the extremely high debt on time. “Because your student loans are little to be your first significant loan into the world of credit, it’s imperative that you handle these loans wisely. ” “Missing even one payment can trash your Credit Score. And a bad Credit Score can lead to higher costs for loans, higher insurance premiums, and trouble when attempting to get a job or an apartment. ”(7) Defaulting on a student loan goes on your credit report and can seriously hinder your ability to get a loan later in your life. Student Loan defaulters are restricted in their access to bankruptcy protection. The IRS can seize defaulters’ income tax refunds, and students who default on an education are prohibited from participating in the student loan program thereafter. (8) Sadly, many students end up defaulting on their loans, ruining their credit scores. Last year one in 10 recent borrowers defaulted on their federal student loans within the first two years, the highest default rate since 1995, according to annual figures made public Monday by the Department of Education. (9) Alternatives My opponent will likely state that federal student loans are necessary for our education system. I will contend there are better alternatives. Tax Credits I support the expansion of the tax credit system for low-income students. Currently, there are various tax credits already available to students. (10) The American Opportunity Tax Credit those eligible qualify for the maximum annual credit of $2,500 per student. The Lifetime Learning may allow students and parents to claim up to $2,000 for qualified education expenses paid for all students enrolled in eligible educational institutions. Deductions are also available to student, The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. The benefits of the tax credit system is it decreases the cost burden on low-income workers without putting poor students into huge amounts of debt. Another benefit is it doesn't cost other taxpayers anything, it simply decreases taxes for the individuals it's intended to help. Work and Study Working while going to college is a viable alternative to students who need money to pay for tuition. Not only does the money you earn pay for the tuition, but there are also other benefits. One benefit of working while in college is that it can help build your resume, regardless if the job is in your field, according to a Scholarships. com article on balancing work and college. (11) There are also Vocational Programs, Grants, Direct Aid, Scholarships, and investment plans. As I've run out of time and characters, I will go into alternatives deeper next round. Sources 1. . http://mercatus.org... 2. . http://dailycaller.com... 3. . http://www.downsizinggovernment.org... 4. . http://www.cato.org... 5. . http://www.theatlantic.com... 6. . http://www.aascu.org... 7. . http://articles.latimes.com... 8. Chang, Cello. “The Impact of College Debt and costs”. Dis. California State Polytechnic University. Pomona. 2000. Print. P.12 9. . http://www.irs.gov... 10. . http://www.benefits.gov... 11. . http://www.schools.com...