How Students Are Overborrowing to Pay for College

How Students Are Overborrowing to Pay for College

 

(RepublicanNews.org) – Students often seek higher education, but college is an expensive venture. Because costs would block many students, they look for ways to finance their education. While there’s nothing wrong with getting a loan for college, many students are overborrowing. 

SLM Corporation, more commonly known as Sallie Mae, is a publicly-traded consumer banking company originally founded to service educational loans. The company issued a report finding only 68% of families completed the Free Application for Federal Student Aid (FAFSA) last year. The number shows a steady decline over the past several years.  

Scholarships and grants are a way for students to pay for college without paying for borrowed funds. Yet, Sallie Mae found that only 44% of families utilize them; many students claim they didn’t know about the grants. 

Still, while federal aid is certainly a great way to qualify for financial help, it doesn’t guide students on how much to borrow, sometimes leading to them overborrowing. Students might avoid borrowing too much by applying for scholarships, grants, and work studies. Sallie Mae claims it’s only about knowing how to find and claim them. SLM offers a search tool to help students find available grants and scholarships. 

Federal aid is also a great way to pay for higher education. Yet, again it comes with no limits on how much a person can actually afford to pay back, often leading to overborrowing and immense debt. After a family has done everything they can to obtain college funding, and if there’s still a funding gap, they might look into securing a private loan. However, students should always use secured loans as a last resort rather than a first option. 

Fiscal Conservatives don’t believe student loan forgiveness teaches students to be responsible about borrowing money. They feel many students think they can borrow a bunch of money, and if they can’t pay it back, so be it. But there are short-term and long-term consequences to defaulting on student debt. Ultimately, Conservatives advocate the best way to stop people from amassing unmanageable college debt is to educate them about responsible borrowing and how to avoid borrowing more than they can repay. 

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