Many students on campus have first-hand experience with the mounting pressure of student loans. They may seem harmless when you’re 17 years-old and searching for a steady way to cover college expenses, but the continued inflation of student loans now constitutes a nation-wide crisis.

The Federal Reserve Bank of New York recently released a report stating that outstanding balances rose over 500 percent between 2003 and 2018. The report found the total amount of student debt to be a whopping $1.5 trillion. In 2017, Student Debt Relief, a private corporation specializing in student loans, found that the average debt-per-graduate was $28,500. With the increasing threat that this debt poses to students, we must question where our society should draw the line between the value of a college education and the threat it poses to students’ financial future.

To understand how this issue affects graduating students, it’s vital to understand the root of its cause. According to Yahoo Finance, the vast majority of student loans were made by banks and private lenders. These loans were, in turn, guaranteed by the Federal Government, given that the majority of borrowers have limited credit history. The government’s guarantees also ensure that, regardless of the relatively-low value of most loans and the restricted repayment options, banks will be repaid.

The growing cost of college parallels students’ needs for larger loans. The College Board reports that the average cost of tuition rose to $35,830 in 2018 — more than twice the amount that college students paid forty years ago. The higher cost in tuition leads students to take out larger loans, which leads to more profit for the system that lends them. The problem here is that, while the amount of student loans has tripled in less than a decade, the infrastructure of the loan system providing them remains generally the same and is therefore unable to properly address the persisting debt problem.

The student debt crisis is even more alarming at historically-black colleges and universities, otherwise known as HBCUs. In 2017, a

Wall Street Journal

analysis of Department of Education data found that graduates of these institutions were confronted with about $29,000 in debt on average — around 32 percent higher than the amount that graduates at public and nonprofit universities face.

The disparity becomes even more apparent when comparing student repayment rates. HBCUs account for only 5 percent of the total four-year institutions in the U.S., yet make up more than 50 percent of the 100 schools with the lowest three-year student loan repayment rates. The Federal Reserve reports that black families have the lowest average household income of all major racial groups in America, which could partially explain why the amount of student debt is exponentially higher at HBCUs, among other factors. This troublesome statistic depicts the increasing difference in student debt between racial groups, further illustrating the disparities present in the current student loan system.

College students vary in their awareness of the extremely negative consequences student debt can have on their ability to finance their future. Years may pass before graduates begin to even scrape the surface of covering their outstanding loans, adding to the frustration of repaying a five-figure debt statement on top of covering personal expenses. With limited repayment plan options, the problem becomes even more frightening, as it confines graduates to following a defined and profitable system.

Issues around the handling the student debt crisis in the U.S. have been repeatedly discussed by candidates in the lead up to the 2020 election; while some believe the solution lies in free tuition, others support a provision that regulates the amount of federal aid that students can receive. The discussion of finding solutions to this issue is a pressing one; far too many graduates suffer under a crippling mass of debt.

By focusing on the mechanics of the student loan system, attending to the particular groups that are most affected, and teaching students and alumni the financial tools to facilitate their ability to cover their student debt, we can begin to meaningfully address and minimize the severity of this issue.