by: Natasha Punwani
When you pick up the Wall Street Journal everyday, it is hard not to turn your face away as the first words you will, more likely than not, come across are ‘Credit Crunch Crisis’ or ‘Declining Dollar.’ Even as college students, we know that this is not leading in a good direction and that our future may actually have a ‘49% Chance of Recession’ as experts have come to estimate. Even whether or not this is true, what we are most effected by is the fact that we are taking out college loans now, at a point in time where the economy continues to slide and borrowing loans do… well, just the opposite.
While lenders such as Sallie Mae and College Loan have constricted the number of loans they are giving out, they are also inflicting a close-to-unaffordable high interest rate to borrowers that do not have a perfectly clean credit history. Most of these lenders provide a variable rate which can go as far as 14% over the lifetime of the loan and when that is added back onto the average tuition, the numbers do not look good for us. Furthermore, many have gone as far as freezing student loans all together.
In addition, various universities across the country have exacerbated the situation and are now being scrutinized as they have been found guilty of previously working with these lenders in order to profit from students. It has come to attention that many of these institutions work with private lenders by allowing them to market their service on campus grounds. In return, the lender has the ability to raise its interest rate and allow the university to reap from a part of the profit. While this can be viewed as good business, it is easier to understand the veiled ethical dilemma.
To put this in a larger perspective, why is it that we are facing this quandary when other universities within other countries promote education by providing their citizens with low tuition rates? For example, the ceiling for tuition within the United Kingdom is £3145 (approximately $6200). This rate can only increase as much as inflation increases. As college students, ready to invest in education and increase the value of our own personal portfolios, it is important that we stay aware of these continuing ethical issues.
Now, more than ever, the credit crunch crisis is affecting the amount of loans students receive. This, in turn, may hinder the amount of people who are capable of receiving an education from doing so. Is it time that our country looks at what others have been doing as a means of improving our future generations? While our present volatile economy is taking its toll on people throughout, we, as college students, are taking a big hit from it as well.