A new financial crisis?

Student loans are a highly discussed nowadays. Some people think they are extremely beneficial, while others suggest they could cause a second financial crisis.

So the question is who is right? Are student loans a good solution to high tuition fees or will they cause another recession?

Graduation – the reason for a financial crisis?

Advantages of Student Loans

Nowadays a University degree is almost seen as a necessity to find the job you want or have a successful career.

Student loans allow everyone to have a higher education. Many students can`t afford these high tuition fees, student loans make the dream of going to a university possible.

Disadvantages of Student loans

Majority of students don’t think about the consequences when applying for student loans. This leads them into a higher debt then they thought. Some of which won’t have considered the interest rate on top of the debts and the penalties for not paying the debts such as added fees.

The student loans turn into a huge burden, especially when students struggle to find a well-paid job after they graduate. This burden can affect their credit scores, which can make it difficult to get loans or buy houses in the future.

This situation can be compared to the mortgage crisis in 2008, students don’t know what they are getting themselves into (or are forced to do so, because they can’t afford higher education otherwise) and banks give the loans to anyone who wants them.

In the US some experts say that the student loan defaults can impact the US economy and possibly trigger another recession.

Conclusion

As the disadvantages clearly outweigh the advantages not only for the students but also for the economy, I believe we have to find a new solution to high tuition fees or perhaps a different way of paying off the debts to ensure students are able to pay the back – for example no interest rates on student loans.

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