Limiting loan funds for students who borrow
The 2008 housing market crash has left American economists to consider whether the student loan crisis could be the next economic bubble to burst.
While federally subsidized student loans cap at $31,000 at most for four years of tuition, private lenders choose their own caps based on a student’s ‘cost of attendance,’ often surpassing $100,000 in loans for four years of schooling, according to an article from Business Insider published March 9, 2015.
If private lenders were to have a lower standardized cap on student loans, college tuition would decrease and graduating college students would not be faced with such immense debt after graduation.
Student loan debt has surpassed credit card debt, currently totaling $1.19 trillion as of August, according to an article from usatoday.com entitled, “Student loan debt: America’s next big crisis,” published on Aug. 23, 2015.
Because of the current relative ease with which students can obtain private loans for college, students continue to take out loans whose eventual repayment is typically beyond their means.
So, as money remains accessible to any student willing to take out private loans, college tuition costs continue to rise, just as real estate costs did when mortgage loans were easily obtained.
In order to stop the destructive cycle of students borrowing more money than they can ever repay, Congress must pass legislation that limits the amount of money a student can borrow from private lenders.
According to the aforementioned Business Insider article entitled, “Mark Cuban: Here’s how to fix America’s crippling student debt crisis,” “With this type of cap on student loans, colleges would be forced to lower their tuition or risk losing potentially millions of dollars from declining enrollment. ‘When you put a cap on loans, the money’s not available to universities and colleges,’ Cuban said. ‘They have to either raise student aid or lower tuition, or some combination of the two.’”
With private lending caps for student loans, American colleges and universities will be forced to rein in their excessive tuition costs, and in turn will make the American dream of higher education more accessible than ever before.