The Impact Of Student Loan Debt On Social Security Benefits – Higher education is a path to greater financial security and prosperity. The pandemic-induced recession illustrates how Georgians without degrees are most vulnerable during economic downturns, with unemployment rates for individuals with only a high school education—37 percent of Georgian adults—constantly double those with college degrees.[1]
[2] Many jobs lost during recessions do not return, and almost all new jobs created during economic recoveries require some level of postsecondary education.[3]
The Impact Of Student Loan Debt On Social Security Benefits
But students seeking a bachelor’s or associate’s degree or other postsecondary credentials often face financial roadblocks, including high costs that drive them into student debt. Growing student debt indicates a shift in risk and responsibility for paying for higher education to individuals from the public, yet the burden of excessive student debt is spreading from individuals to the economy.
How Student Loan Debt, Or Not Having It, Shapes Lives
Viewing higher education as a private investment rather than a shared responsibility intensifies financial risk in an economy where postsecondary education is increasingly critical to achieving economic security. Debt burdens vary widely by race, ethnicity, and family wealth, and borrowers experience different challenges in repaying debt based on the amount of the loan and the jobs they can get. Worryingly, debt rates and loan amounts are very high among black students, whose college enrollments have grown rapidly while state funding for colleges has declined and tuition has risen. Debt is too risky for some low-income students who choose not to borrow and face tough trade-offs that can hurt their chances of going to college, getting a degree and achieving financial security. Student loans allow for-profit colleges, which disproportionately enroll black women, to charge high prices for credentials that often do not provide adequate returns to the workforce. Students who borrow and do not graduate are hardest hit, and graduation rates are lower for students from low-income families and black students who face multiple and cumulative financial, institutional, and academic barriers to success.
State leaders can create stronger communities and a more prosperous state by adequately funding colleges and universities so they can provide high-quality education while keeping costs low for students. Schools can work harder to support students and remove barriers to graduation. Federal and state governments, schools, businesses, and students themselves have their share. Postsecondary education should be a shared responsibility, with mutual benefits for families, communities, and the state.
Student loans enable many Georgians to attend college, but the consequences of excessive debt can also hurt students’ financial security and slow overall economic growth. For example, student debt is associated with lower rates of homeownership among young adults, and housing is a vital sector of the economy and personal wealth.[4] Debt is also associated with a reduction in small business formation, the engine of economic growth, as small businesses rely most heavily on personal financing.[5]
Many student borrowers struggle to repay their loans, and loan defaults can exacerbate existing cycles of financial insecurity. Nationally, 27 percent of borrowers will default on a federal student loan within 12 years of starting college.[6] Borrowers in default may experience wage garnishment, withholding of income tax refunds and ineligibility for state and federal programs such as HOPE or the recent Wage Protection Program. Federal and state debt relief options, such as Public Service Loan Forgiveness, have systemic problems that mean few borrowers receive the relief they expect.[7] Bad credit scores from loan defaults can also make it harder to get approved for rental housing or cause higher interest rates on other forms of consumer debt. Student loans cannot be discharged through normal bankruptcy proceedings, so the vast majority of people who file for bankruptcy do not seek debt relief (although less than 1 percent of people who go through special proceedings obtain some relief).[8] ]
Student Loan Debt Increases Slightly In 2021
Students borrow to pay for college when the cost of attending college exceeds available financial resources. Most college graduates complete their degrees with debt: 57 percent of Georgia graduates carry debt, and of those who do, the average debt is $28,824.[9]
Unlike K-12 public education, individuals and families bear a significant portion of the costs of public postsecondary education. Because students are older, many do not receive financial or material support from parents or family. This means that attending college is a unique period when students are expected to pay for an education and support themselves at the same time, before they have the necessary credentials and income to do so.
The cost of higher education is a shared responsibility between the state and federal governments and families. But both the state and federal share of higher education costs have declined over time, while the cost burden on individuals and families has increased.
When the state developed the current higher education funding formula in the 1980s, three-quarters of the costs were funded by the state and one-quarter came from tuition. Over time, state funding decreased, and the student contribution doubled to today’s flat share.[10]
Debt Moratoria: Evidence From Student Loan Forbearance
Federal Pell grants have also declined in the share of higher education costs they cover. As recently as 2001-2002, the maximum Pell grant covered an average of 42 percent of the cost of attendance. In 2019-2020, the maximum Pell Grant of $6,095 now covers 28 percent of the average cost of attendance at public four-year colleges and 12 percent at nonprofit private colleges.[11] The wages for the jobs that students can get are low compared to housing and other costs. In 2001, a student could work a full-time, minimum-wage summer job and earn enough to pay two semesters of tuition and fees at Kennesaw State University—assuming all the earnings would pay for college. Today, the same earnings would cover just one semester of tuition.[12] So it’s no surprise that the average student loan debt for borrowers has increased by about $7,000 over the past 15 years in Georgia.[13]
With federal and state support declining, individuals and families must rely on their own income and savings to pay for college. Both are unevenly distributed in Georgia today. Median family income varies widely across the 22 colleges and universities in the University System of Georgia, from under $18,000 to over $120,000.[14] (Data are not available for technical colleges or private colleges and universities.) Many students struggle to make ends meet, let alone pay for college.
Undocumented Students Not Eligible for Federal Loans and Aid Undocumented students are not eligible for federal financial aid, including federal loans, state student loans, and state aid like HOPE. They are also not eligible for in-state tuition. These students must rely on private scholarships and loans and pay out-of-pocket for higher in-state tuition. In Georgia, about 14,000 undocumented students ages 18-24 are enrolled in school, and 30,000 are not, according to estimates by the Migration Policy Institute. Without access to loans, grants and in-state tuition, college is too expensive for many undocumented students.
Differences in wealth are also large. In Georgia, the median net worth of white households is six times higher ($123,830) than that of black households ($20,630).[15] The racial wealth gap contributes to and is exacerbated by student debt. Policies and practices that excluded African Americans from building wealth, such as redlining, discriminatory lending, and housing discrimination, prevented black households from building wealth and robbed them of existing wealth.[16] With fewer family resources to pay for college, black students are more likely to turn to loans to finance higher education, and they borrow more on average.[17] Student debt subtracts from black wealth in young adulthood, perpetuating the cycle of lower wealth and assets among black households. Ironically, the path to opportunity that higher education represents for so many may contribute to financial insecurity and wealth disparities between white and black Georgians when linked to excessive student debt.[18]
Explainer: How Biden’s Student Loan Forgiveness Will Impact U.s. Consumers
[19] In addition to discrimination, many black Georgians experience so-called “predatory inclusion,” where higher education is only available under risky or exploitative conditions that may limit its benefits.[20]
It is important to note that some students with financial need will choose not to borrow. While these students may be able to avoid debt, the trade-offs they make may reduce their chances of enrolling, progressing, and graduating from college. Strategies students use to avoid debt include attending lower-cost (and lower-resource) two-year colleges, delaying or pausing enrollment in school to work and save money, enrolling part-time, and working with part time or full time.
Asian and Latino students, immigrant families, and independent students without parental financial support are less likely to borrow, even when they have significant financial need. Factors associated with delinquency include the complexity of applying for federal loans, different cultural perceptions or prohibitions on debt retention, and negative experiences or inexperience with financial services, institutions, credit, and debt.[21]
College students in Georgia have become increasingly racially and ethnically diverse. In the university system, black, Latino, and Asian students are enrolling in college in greater numbers each year, far outstripping population growth, while white student enrollment has declined. Over the past 20 years, black student enrollment has been twice the growth of the black population and Latino student enrollment has been more than four times the overall growth.[22]
Mind Blowing Facts That Show How Dire The Us Student Loan Crisis Is
Overall, 57 percent of college graduates have student debt in Georgia.[23] Most student loans are provided by the federal government, with a small portion coming in
Student loan debt assistance, student loan debt consolidation, student loan debt and social security, student loan debt social security, impact of student loan debt, can student loan garnish social security benefits, student loan debt and social security payments, settling student loan debt, refinancing student loan debt, economic impact student loan debt, refinance student loan debt, consolidating student loan debt