Land of the Free, Home of the $1 Trillion Student Debt

Farnoush Amiri

First generation student Shadan pays a small fee for her university education in hopes of becoming a family counselor. Shadan and her twin sister had always dreamed of moving to the U.S. but after an immense drop in German tuition rates, the 26-year-olds are staying put. “Post-secondary education should be a human right, not a privilege.”

Student debt is now the second highest form of consumer debt in America behind homeowner mortgages, with more than 7 million students attending both public and private universities in the United States borrowing money.

Over 15 percent of those American student borrowers default on their federal student loans within the first three years after entering the repayment period. And since 1978, the cost of a post-secondary education in the United States has risen 1,120 percent, according the U.S. Census.

The average price tag for tuition and fees at public colleges and universities in the United States were close to $8,400 in 2013-2014 for students studying in their home state and nearly $19,100 for those paying out-of-state tuition.

For private universities the bill runs up to nearly $30,500 annually. This is a 28 percent national inflation rate since 2008 for public, 4-year universities. The state with the highest tuition inflation rate is Arizona, where fees have raised an average of $4,493/per student.

Hannah Brown headshot (1)
Hannah Brown: student from the U.K. on an exchange program at SF State.

The country with the second largest student debt rate is the United Kingdom, with close to a million students who have borrowed an average of $10,200 each during the 2012-2013 school year.

One crucial difference between the U.K. and U.S. student debt issue is that about 98 percent of student borrowers in Great Britain are meeting their payment obligations. Those obligations are made easier through the U.K.’s repayment program, which automatically deducts monthly from British students debt and they are not required to pay back until they are earning an annual salary of £21,000 or $33,700.

“Everyone who goes to university [in the United Kingdom] is eligible for a loan and non-repayable grant to pay tuition fees,” says Wales native Hannah Brown, who is currently on an exchange program at SF State from London.

U.S. Rep. Tom Petri of Wisconsin explained in his statement last April that the U.S. Government should take a page from Great Britain’s response to their student debt crisis. “It’s pretty simple if you think about it,” Petri said. “When students graduate from college, traditionally they will make less. And then as they progress in their professional career they’ll earn more. The repayment schedule should follow this trend so that borrowers pay less early on and more as they earn more.”

Recently the United Kingdom capped the tuition fees for four-year institutions at £9,000, or $14,521, which no student is obligated to pay upfront.

Another thing that sets the U.K. apart from the U.S. when it comes to their approach to the global issue of student debt is debt forgiveness. “If my student loan isn’t repaid in full after approximately 30 years, the debt is forgiven,” shares Brown.

The closest country with a developed post-secondary education that mirrors America is Canada. One in eight Canadian families have an average median value of $10,000 in student debt. As of 2012, Canada has a total of $28.3 billion in outstanding student debt, which still pales in comparison with the U.S. figures.

Canadian student studying at University of Toronto.
Rojin Kalantari: Canadian student studying at University of Toronto.

According to the Statistics Canada Survey of Financial Security that was released in the beginning of this year, Canadian student debt grew almost 50 percent in the past 15 years and 24.4 percent from 2005 to 2012. The Canadian Centre for Policy Alternatives foresee the costs of post-secondary school education — including tuition and compulsory fees — to rise to its peak by the 2016-2017 school year. Ontario has the highest fees with an average of $8,403 and Newfoundland at the lowest with $2,886 in tuition annually.

Ontario, Canada native and student Rojin Kalantari pays $3,020/per term at University of Toronto. “I am so happy that we have the OSAP [Ontario Student Assistant Program,] which gives students 30 percent off tuition fees if they apply before the beginning of the semester,” says the Biology major.

Argentina, Iceland, Norway, and Sweden have been some countries that have strayed away from education costs like America and Canada by providing free tuition to its citizens. Even with their respective governments providing their tuition, students in Sweden still have a student debt close to 22 billion krona or $3.5 billion to cover fees and living expenses at their university. According to annual reports in those countries, roughly two-thirds of those funds were loans.

Germany is another major European country that has decided to gradually abolish the concept of tuition after an outpour of student concern five years ago,  “When I started studying psychology in 2009, I had to pay €700/per semester but that was the time that students began protesting that studying shouldn’t just be a privilege for the wealthy — the protests were successful and beginning in 2011, [German students] only had to pay €200-300 a semester,” explains German student Shadan about the process of her semester tuition rate falling to more than half its price.

With all of the diverse repayment and loan forgiveness programs in the developed countries around the globe, the nation with the largest student debt issue has now begun to think of the future of post-secondary education costs in the United States. In June of 2014, President Obama announced an alternative repayment program that will cap monthly payments for certain federal loans at 10 percent of the discretionary income. The program, which will be available beginning in December 2015, will allow more than 5 million borrowers to qualify.