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With the Burden of Debt Growing, Students Fight Back

A person wants to go to college. They apply for financial aid and typically receive a small amount of grant and scholarship money, along with a heavy chunk of student loans. Students once signed away on the dotted line for these loans with blithe ignorance. But increasing cultural awareness of financial planning is making students ask questions like never before. Why are these loans so huge? Why does it take me years just to pay off the interest on my loan? Why is the interest as high as it is? How will I ever buy a house or get on with my life after college if I am in enormous debt?

The average student debt after graduation from a four-year program is $20,000 in the United States. Students attending graduate school or medical school have a debt closer to $100,000. The rate of national student debt has grown a whopping 60% in the last eight years. In 2005, Congress cut the student loan program by 12 billion dollars, which forced interest rates to go higher. In several European countries, college is free of tuition costs. I long ago decided that if I ever go to graduate school, it would be in Germany. Even as a foreigner, I would pay nothing except for a few fees (on average $200 per semester), and the level of education is excellent, definitely comparable to colleges in the United States.

Students are asking why our country makes it so difficult to pay for school, when other countries take care of their students. As many students learn the hard way, missing a few payments on their student loan can result in poor credit. Then, when the young adult applies for their first loan through a bank, for example a home loan, the bank denies them. Banks today have sophisticated software to determine the credit history of a person. Nothing is hidden. Using loan origination systems the bank knows in a matter of minutes if you are eligible for a loan, and with their business rule engines banks can make credit decisions instantly.

Students burned by student loan debt are telling the next generation to get educated about what they can do to fight back. The “Student Debt Alert” is a national campaign organized by and for students. SDA actively teaches students how student loan negatively affects their life and career. SDA gives speeches and demonstrations, and encourages students to write letters to the government. The SDA platform calls for reforming student loan programs, increasing student aid funding, improving loan forgiveness policies and loan refinancing options. In 2006, the SDA sent hundreds of postcards to the Spellings Higher Education Commission, expressing concern about the burden of student loan debt.

Students’ actions are making a difference. On September 7, 2007, Congress passed the College Cost Reduction and Access Act that increased Pell grant aid and made student loans cheaper and more manageable. Analysts said that the Act passed largely due to the efforts of student campaigns like the SDA.

However, the fight continues. In current debates, Hillary Clinton often discusses her concern that the student loan industry still has too much of a grip on student’s lives. Students: Fight on!

About the author: Amy Brevard is a Writer for Innuity. For more information about how banks determine loan eligibility through loan origination systems and business rule engines go to zootweb

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