Student Loans are an International Pain in the ButtMia Galuppo

America has the most expensive higher education system in the developed world, with student loan debt to prove it.

According to US News, for the 2013-2014 school year, average tuition and fees at public colleges and universities in the US was close to $8,400 for students studying in their home state and nearly $19,100 for those paying for out-of-state tuition. 37 million Americans now have outstanding student loans, totaling $1 trillion in debt.

Although these astronomical numbers remain unmatched abroad, student loan debt is becoming a growing international problem.

In the United Kingdom the total outstanding student loan balance is £40.3 billion (roughly $64.8 billion). Unlike in the US, a debtor in the UK is not required to make payments on their loans until they reach a certain annual fiscal threshold, which was £16,365 (roughly $25,500) for 2012.

This threshold makes the default rate in the UK very low, with 98% of borrowers meeting their obligations, but for students who are educated in the UK and then relocate to other places in the European Union, the default is a shocking 45%.

A similar problem is occurring in Australia, where more than half a billion dollars is owed by people no longer living within the country. The country’s previously forgiving student loan system, where borrowers had 35 years to payback loans, has now become much stricter, allotting only 15 years for repayment.

In Japan, as of 2012, student loan renewals are now being based on academic performance, where borrowers are warned if they are under-preforming. To continue to receive loans, students are required to renew their applications every spring, the beginning of the school year. This year, 600 students lost their loans due poor performance.

Some international colleges, including those found in Sweden, Argentina and Iceland, offer free tuition. Nonetheless, government loans are still taken by students who are unable to pay for other fees, such as cost of living.

Debt paired with a poor economic climate and lessened job opportunities has lead to student protests across the globe.

Within the US, there is prospective legislation that would call for universal income-based repayment on all federal student loans with payroll withholdings, which would be similar to the system seen in the UK. But with 7 million borrowers currently in default, student loan debt shows no signs of slowing.

When faced with such astronomical figures, there is no denying that the American higher education system is broken.

College is supposed to be the best four years of your life, but the sad reality is that you may end up paying for those four years for the rest of your life.

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  1. Coming from the UK, I beg to differ. Our system is by no means is a perfect one, if you hadn’t noticed from the major riots of 2010. Our student fees have been steadily rising for a while now, to align ourselves with the rest of the world. On one hand, I think is fairer to those who aren’t privilege enough to live here, but other the other hand was incredibly cruel after we had been told we may be going down the same road as Iceland, Sweden and Argentina and getting it for free. So understandably, it was a bit of a slap in the face when it suddenly rose to £9k a year.

    I was lucky enough to get away with paying £1k per year for my tuitions fees which, I know…comparing to American fees is a steal. But I was also given a £3k loan each year for maintenance or ‘living costs’ which mainly went on paying my rent for a year (with rent being roughly £500 for 8 months of the academic semester – is about £4k and that’s before food). I still had to work to find the extra £1k and money for food. So each year I racked up roughly £4k of debt as well as interest. 6 years later I have roughly £20k of student debt (because of the interest) to which I luckily only pay £12 a month towards – which barely covers the interest. I agree we are lucky in respect that we have no time limit in order to pay it off, and there is no urgency to get rid of it – but it is still there and I know I am one of the lucky ones.

    A year after I started university the fees rose to £3k per year (which I missed by the skin of my teeth) and a couple of years after that the tuition fees rose again to £9k, with whispers of it going even higher …so baring in mind your course is what, 3 years? Plus the maintenance, that £36k …plus the interest accumulated each year – which if it is anything like mine would leave you with at least £40k ($65,154.53) which is a significant amount and would make anyone question whether or not it was worth going – which I feel sadly is the point.

    Going to University is a privilege. It’s not for everyone and most definitely isn’t and shouldn’t be the party everyone makes it out to be – well definitely not with that price tag attached to it. However, I feel a deadly mix of a dire economy and the fact that there are so many graduates – BECAUSE of the cheaper fees has left the UK crippled. Many school or college leavers are encouraged to go to University, and it has unfortunately because they don’t really know what else to do. And to be honest, who DOES know at 18 years old? I sure didn’t. You are fresh out of school and not sure what it is that you are meant to do – you have two choices – get a menial entry level job and save for a car/holidays/deposit/rent for the next 3 years or go to University. As apparently my attendance at a University will get you a GOOD job, like so many others I chose the latter. I was going to get a job I loved, a job that paid well and job which appreciated me. That was the plan. Graduating I had the world ahead of me. I had a degree. I held it like a shield when I went to interviews, bright face and bushy tailed only to find out it was made of paper and tin foil. Because of the cheaper fees… a degree had become pretty worthless. What use was my degree in English Literature and Media Studies, in a recession swamped with graduates? I couldn’t get a job in my field – unless I wanted to do a year unpaid as an intern. And my degree was not specific to anything, so with no experience other than shop work, I found doors slamming in my face when I had been promised a promising career.

    It was heart breaking to say the least. I was allowed 3 months by my parents, before it got to the ‘I’ll take anything’ point – which was gutting. I felt ashamed that I had worked so hard and yet was still unable to get a job that someone without a degree could have got. I worked at my local job centre of all the places (I had been visiting it at the time for my 3 months unemployed stint) and was given the opportunity. I was bitter to say the least. So out of sheer stubbornness, I became determined to specify and use my degree and get a job in my field. I refused to allow my degree mean nothing, and for it to be ignored. So I went that step further – used all my savings and worked 2 miserable years to afford 2 Masters. I specified in Publishing and Teaching and Learning in Higher Education.

    What do I have to show for the £20k MA and MFA? An entry level admin job at a construction company. Now, I know these letters I’ve attained will never be taken away from me. But it hurts and I am impatient. I am not ungrateful – I know I could be far worse off – as there are many out there with no job at all. But my insatiable ambition (I guess that’s what makes me a graduate) will not let this lie and I am always going to try for something better…

    Anyways, to give perspective to the £16k threshold, I am on £18k and was barely able to get references in order to rent a flat. After tax, I earn £1,250 a month…now with rent, council tax, and bills… I am pushing £900 – not including phone and food! I could not imagine living on £16k and unless your rent is pretty much none existent…no one could live on it.

    It all comes down to circumstance…luck and contacts I fear. And SERIOUSLY thinking whether or not the debt is worth it – will this guarantee you a job that will pay more than the debt you raked up? Or is it worth spending the 4 years cultivating a career without it? Just look at Steve Jobs!

  2. Can I ask where you got your information on Australia from? It’s particularly concerning for me, as I have a HECS debt, which is NOT a student loan – it’s a debt to the government, whereby you pay a higher tax rate when you earn over a certain amount… there was never any time limit to it. Having said that I’ve been out of the country a while; but this is the first I’ve heard of us only having 15 years to pay back our government university debt.

  3. Double or triple those numbers if you’re going to a private university… Ugh… It’s just ridiculous.