Escalating Student Debt

[Niko]

Cost of an Education

Recently we covered an interesting insight into student loan debt.

Many governments around the world have special programs and assistance to make tertiary studies more affordable. However, is it enough? Can more be done? In Australia, there is the HECS scheme which is available to all students. In the USA, there are Federal Pell Grants available only to low income earners. With all this assistance, then why does student debt continue to increase?

Federal Pell Grants in the USA

This is the main program for low-income students, and has been frozen at a maximum of US$4,050 for the past 4 years. Eligibility for Federal Pell Grants was changed last year - with the effect of excluding 81,000 young people and reducing grant money for another 1.9 million. The new US$3.75 billion for maths, science and language students will help, but critics say the conditions are too strict. The beauty of Pell Grants is that the money never has to be repaid, hence the name "grant" as opposed to "loan".

Higher Education Contribution Scheme (HECS) in Australia

The provision of cheap loans to Australian students. A HECS loan needs only be repaid when the student finds full-time work after graduation. The government automatically deducts loan repayments directly from income.

Still, more needs to be done

There are still legitimate gripes amongst students who go onto low-paid professional work in the public sector. Careers in social work, education and the worthier sorts of law all normally involve several levels of tertiary education, but the typical salary for graduates entering such public interest professions was just US$36,000.

According to PIRGS, more than 60% of undergraduates finish with some debt; and nearly 40% of these borrowers contend with "unmanageable" debt levels, meaning their payments are more than 8% of their monthly incomes. And those who do a stint in graduate school end up even more in debt!

[rwall7943]

I know when I graduated I was in in debt from student loans for 5 years. It is very frustrating to start you career in debt.

[vare2]

yea I think the cost of tertiary education is becoming higher and higher in modern times, good thing that some of them offers financial aids. Personally, I know my parents are paying but I feel guilty for letting them pay for such a huge sum of hard earned money..sigh =(