College Loan And Scholarship Policies

College Loan and Scholarship Policies

Abstract

Recently, the federal government has taken away from student loan budgeting, loans and scholarships have become more discriminatory, and private loan companies are charging overwhelming interest rates. This has caused fewer students to get less money to help them pay for college, and the ones that do are likely to have accumulated much debt by the time they graduate. In essence, loan policies are turning students away from pursuing college by making it seem financially unfeasible. Student loans should be available at lower interest rates and with an income-contingent repayment option to all students planning to attend college. Scholarships should be made available according to scholastic achievement rather than financial need. The government should reformat their loan policies.

Higher education is extremely important in today’s society. According to former president Bill Clinton, “education is the fault line, the Great Continental Divide between those who will prosper and those who will not in the new economy” (Fossey, Bateman 19). Education is one of the most influential determinants of the quality of life, from an economic, social, and personal standpoint (Fossey, Bateman 19). However, higher education is severely “constrained by the structural realities of financing one’s education” (Price 27). The flaws of financial aid programs and scholarships cause some students to go without higher education, some to accumulate high amounts of debt, and force some to abandon their passions in order to acquire a high paying job to pay off their debt and make their expensive investment profitable. Under current loan and scholarship programs, many qualified and needy students cannot get the monetary aid that they need in order to embark on a college education. Loans and scholarships are essential for around seventy percent of students (Price 18). These are the crucial elements that allow people to get the education needed to access “jobs, goods, and economic security” and what make for a more educated citizenry, which “increases economic productivity, enhances the quality of life among diverse communities, and strengthens democratic political institutions” (Price 1). Because higher education is not subsidized adequately as to be in reach of all qualified students, changes should be implemented. College loan distribution policies should be reformatted because they currently are being cut back, are discriminatory, and have overwhelmingly high interest rates.

However, some people feel as if college loans and scholarships trends today are very effective. Many believe that awarding scholarships based on merit rather than financial need leaves those with financial need behind. Some argue that by offering merit based need, less reputable schools attempt to “buy” students from more prestigious schools by offering them more money than the first school would be able to (Price 110). Merit aid is also believed to redistribute money between schools and students, instead of equally distributing students to schools (Price 110). In reality, merit aid could possibly cause students to chose less prestigious schools, but this would in effect be of benefit to the school system as a whole because it would allow less reputable schools to become more prestigious and give more students a chance at attending a higher quality academic institution. This type of competition would be very prosperous to both students and schools.

Needs

The reason that loan rates were able to elevate to rates as high as they are today is that students are overly reliant on them. In today’s society, higher education is essential for a person to be stable and comfortable in life. Not only is education needed in order to pursue financial interests, it is also needed for a person to have social value. Because education is so valuable to a person, it is also able to be given at a high cost (Fossey and Bateman 37). Education is more expensive than ever today. For example, the University of Pennsylvania listed an expense budget of $42,100 for the 2004-2005 schools year alone (Johnson). Along with high tuition prices, students are at a loss because scholarships and grants are harder than ever to receive. Federal student loan programs have recently been severely cut. Even scholarships are harder to get than ever because most focus not only on achievement, but on a student’s family financial need. The only opportunity to be able to afford college is to resort to investing in college loans.

One underlying defect that causes problems with loan and scholarship funding is that there is an imbalance in the purposes of higher education. This imbalance is caused by an array of factors, and is the root of all controversy regarding funding for higher education. First, students cannot pursue higher education with a focus on their self-interest because of forces of the economy. In 2002, the Advisory Committee for Student Financial Assistance reported that over 170,000 college-qualified students were unable to attend any post-secondary institution due to financial barriers (Price 20). Due to the high cost of higher education, students are reliant on loans and scholarships. When a student is destined to resort to taking out a large, expensive loan, they are faced with a contradiction of motives of going to college in the first place. While most students go to college in order to gain experience and opportunities that will allow them to like a financially comfortable lives, others pursue college to expand their horizons, do valuable research, and become a more valuable part of society. Many pursue college for both of these reasons. Students are pressured to find immediate employment after graduation in order to pay off their debt (Lleras 35). If one student wanted to travel the world for a good cause after college, they would be set back by their debt from college and lack of money to pursue their trip. Some students are interested in governmental careers and public service jobs that receive meager incomes. High debt students considering low-income jobs must abandon their previous motives and work for money, not toward their passions and goals (Schrag 3). This contributes to the problem of people being motivated by money, while also turning many qualified people away from government and service careers where they could potentially make a huge impact. The second cause of this imbalance is that while loans seem to reduce the amount of college tuition and reduce the amount of money students must raise through work,