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Kevin Ewald
Mrs. Douglas
English 112
Monday, March 09, 2015
Game of Loans
Student loan debts have reached a record high of 1.2 trillion dollars in the United States.
In response to this, President Obama recently gave a speech in which he explained the purpose of
his newest proposed bill, which is has been called a student bill of rights. This bill seeks to
restrict lenders to make college more affordable. Many people believe that this is a good move
by President Obama; however, many others think that this will actually hurt American college
students instead of helping.
President Obamas actions could certainly make it easier to get low interest rate loans for
college students. This could be helpful if college costs were based on value provided instead of
the ability of consumers to pay. The average tuition cost has increased at about 7% per year since
the early 1980s, while inflation has risen at an average of 3.2% per year (Feldman). Most
students would say that these huge increases in cost have not been reciprocated in value. Also,
there arent any major increases in costs that universities face every year. If the prices of colleges
are not based on value that they provide, or the costs that they face, students are left to wonder
about what could possibly be causing such high increases in price.
Perhaps the most convincing argument is that college costs are based on Americans
abilities to pay. This argument suggests that colleges realize the importance of a college degree in

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the American workforce, and charge the highest amount that they conceivably can. If this
argument is correct, President Obamas bill to force lenders to give out artificially low rates to
students may just cause colleges to increase their prices even more as they can see that they will
be able to earn more money from the average student.
There has also been some pressure from the American public to nullify all existing
student loans. The supporters of this proposal argue that students shouldnt be forced to have
their lives ruined by massive debt just because they wanted to get an education. Although their
cause is seemingly noble as well, it has also received some criticisms. Opponents argue that if
this were to happen, not only would the federal government be taking huge losses, but several
different types of people would be indirectly impacted as well. For example, people who worked
their way through college to pay for their education would have worked for four years for
nothing. Also, many people decide to go to a cheaper school that they can afford instead of a
more expensive one that they may like more, or may even be slightly better for their future. If
this is enacted, the grief would simply switch from the student debtors who agreed to these
terms, or the other group, who many would argue is the more responsible of the two.
President Obamas plan could also have unfortunate effects for the banks that distribute
these loans. Many economists argue that government interference in the free market is almost
never a good thing for the economy, and banks could be hurt by this bill if they are forced by the
government to give out artificially low interest rate loans. Also, if existing student loans are
nullified, banks that loaned students this money would never be paid back, unless they are
reimbursed by the government, in which case the economy would also be hurt. Either way, it
seems as though either of these ideas could have some serious and unfair consequences for
banks.

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College costs are higher than ever, and have been rising at almost twice the rate of
inflation over the last thirty years. Student debt makes up 1.2 trillion dollars, and the national
default rate has almost doubled since 2005 ("Graph of National Student Loan Default Rates." ).
This problem needs to be addressed, and although neither of these suggestions seems to be a fair
and economically efficient way to solve it, there must be a solution that can outperform the
current situation.

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Works Cited
1. Feldman, David H. "Myths and Realities about Rising College Tuition." Myths and
Realities about Rising College Tuition -. National Association of Student Financial
Aid Administrators, 23 Mar. 2012. Web. 11 Mar. 2015.
2. "Graph of National Student Loan Default Rates." Graph of National Student Loan
Default Rates. Federal Student Aid, n.d. Web. 11 Mar. 2015.