Hispanic middle class students struggle to pay off student loans

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Graduation cap and tassel drawing next to a stack of dollar bills and coins
(Lauren Schatzman | The Daily Trojan)

A middle-class Hispanic couple, both teachers, live in the suburbs with two young adult children.

Their total annual income exceeds $ 110,000; consequently, they face an obstacle because they are not eligible for adequate financial assistance for their children who are in college. The couple’s daughter worked four years at the University of California, Davis, amassed over $ 35,000 in debt and will take on even more student loans to pursue her master’s degree. In the meantime, their son received a scholarship at the University of Southern California, but has still received over $ 2,000 in student loans.

This scenario is far from uncommon.

Hispanic middle-class students graduate with significant debt owing to the high cost of education, inadequate alternative financial pathways, and weak government intervention.

Hispanic students make up only 20% of all Pell grant recipients, and the average debt they collect is $ 30,000 in federal and private loans. The average borrower still owes 80% of their debt 12 years after graduation, and 40% of those with at least an associate’s degree still report having significant student loan debt. It is alarming that middle-class Hispanics are disproportionately behind in paying off student loans compared to their white counterparts.

The main problem is that half of Hispanic students who go to universities are first in their families. According to the Institute for National Postsecondary Education Policy, first-generation students come from low-middle-income families and have more unmet financial needs than college students. Thus, these people are more likely to receive financial aid from school and government.

While this may seem positive at first, as more people from a particular marginalized community can pursue their education, in reality many Hispanic families are making too much money to qualify for a Pell grant, but not enough to afford tuition, room, and food. no credits.

It can be argued that it is more efficient and affordable to enroll in community colleges, where Hispanics can receive an equivalent higher education education. But there is still the stigma that community colleges are nothing more than a poor man’s path to higher education.

A researcher at Vanderbilt University School of Law found that people who graduated from indiscriminate educational institutions earn less than those who attended prestigious schools for bachelor’s and master’s degrees. Consequently, diplomas from high-value schools such as UCLA, UC Irvine, or Claremont College can increase student confidence in their careers.

What’s more, some community colleges have been cutting classes since 2007 due to budget concerns. In California, where the state government recently cut education funding, an estimated 2.5 million students will be out of the system for several years. In the state with the country’s largest Hispanic population, more than 800,000 Hispanic students could be cut off. In fact, it is paradoxical to encourage students to attend community colleges while slashing their budgets.

To avoid taking on too many loans, students are encouraged to join organizations such as the US Army Reserve Officers’ Training Corps, a program that can pay tuition – including room and board – for two to four years.

However, the ROTC is a physically challenging and psychologically brutal institution that awards only a handful of people with significant scholarships and requires eight years of military service after graduation. In addition, the university could cut its financial aid to students if they receive scholarships from other organizations, further complicating the preconceived notion that ROTC is an easy solution to the student debt crisis.

Ideally, President Joe Biden’s decree to forgive student loans is the right solution to the debt crisis. Since his inauguration, Biden has canceled $ 1.5 billion for some borrowers, most notably those who were scammed by their schools.

However, there is a possibility that a future administration could reverse such decisions. This potential solution fails to account for the rising cost of higher education, which is driving thousands of new student loans, and the cuts in public postsecondary education funding, which are fueling the student debt crisis in the first place.

Student loan debt is taxable, but the alternatives also have their drawbacks. Rather than cutting funding for education, state governments should allocate more money to community colleges and vocational schools.

From 2009 to 2012, Montana achieved the highest number of college graduates in the country relative to its population. This was due to increased investment in four specific sectors: the state’s two-year public college system, which allowed schools to freeze tuition; additional online courses for students who do not want to study on campus; dual-enrollment programs for high school students; and access to transferable academic credits, which made it easier to move from two-year college to four-year college.

As a result, students took out fewer loans and had more control over their education.

Another option is to reorganize the Student Loan Marketing Association, or Sally Mae, which, under the watchful eye of the US government, used to buy bank loans to lend more to students. The privatized Sally Mae earned money from government fees and college fees for participating in their programs, forcing students to borrow higher loan amounts. Since then, they have outsourced their loan servicing operations to Navient, which repairs 25% of all student loans in the country.

Ultimately, reforms must be carried out by a competent government to help middle-class Hispanics ease their debts as well as help other Americans.



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