To: Barack Obama, President of the Unites States of America

From: Dianna Davydkina, MPA Candidate

Re: A Tuition-Free Bachelor Degree

Date: September 8, 2016

PROBLEM MEMORANDUM

An economical problem that our nation faces is student loan debt. More and more students are burdened by student loans with limited career opportunities to the point where some don’t pursue a higher education including obtaining an associates degree, at a minimum, in an attempt to avoid student loan debt. Although, federal grants help pay for the cost of education for individuals with a low income, the upper class is able to afford a college education, the middle class is left burdened by student loans as they do not qualify for most government assistance programs. “More than 41 million Americans collectively owe more than $1.2 trillion in student loan debt,” (CFPB). The problem with college debt in this country is always a major talk of discussion. In fall of 2016, more than 20.5 million students are expected to be enrolled in American Institutions. This shows an increase of almost 5.2 million in enrollment since the year 2000 (National Center for Educational Statistics). This in effect has led to an enormous increase in student loan debt.

In America the goal of “college-for-all” has been pursued but many things have an influence on accomplishing this goal. We live in a society where tuition keeps rising and grants are extremely difficult to obtain. Since many cannot obtain grants due to various reasons such as a high family income, this leads students to acquire private and Federal student loans. America experienced a shift from grant to loan processing which is seen amongst today’s students (Choi 2014). With extensions to the Pell Grant system, as well as the reforms of the student loan program in 2010 (Credit Card Act 2009), future generations of college students may see less of a pressure toward high educational debt. This lessening of pressures is not guaranteed and the problem of rising college tuition remains unresolved (Dwyer, McCloud & Randy 2012). In hopes of elevating this problem America needs to pass a policy making a bachelors degree free for all citizens of the country, who do not yet have a degree.

Student loan debt is the second largest class of consumer debt right behind mortgages (CFPB). Debt affects not only the students who are taking out these loans but citizens in this country as a whole. According to the 2015 report from the Consumer Financial Protection Bureau, on student loan servicing, the average debt burden shouldered by an individual borrower grew by nearly 60 percent, rising more than $18,000 in 2007 to nearly $30,000 in the third quarter of 2015 (CFPB). Since debt is a liability it can potentially limit students future options and outcomes, on almost everything, as it is a burden on financial resources of the individual. These resources can instead be used for other purposes such as raising their own families, and affording what was once the American dream. There are many publications that surface this area of concern in regards to debts. A consideration of debt becomes increasingly important for understanding stratification in America as more people look to debt as a strategy for attaining education, housing and other life goals (Dwyer 2009).

With student debt being studied as a precursor to mental health conditions a policy needs to be placed to stop this from surfacing. In order to stop this student debt needs to be eliminated. Having healthy citizens will allow for a better nourishing society. There was a study done back in 2004 that analyzed the relationship between attitudes toward debt and mental health in university undergraduates. There is evidence that attitudes to debt are the reason behind why some chose to not attend college. It is student loans that discourage people from attending colleges. This study talked about how these attitudes have an impact on the mental health of those students who are enrolled (Cooke, Barkham, Audin and Davy 2004). It was found that attitudes towards debt were in fact related to mental health levels. This study does not even reference that student employment can also add on stress factors causing even more of a decline in mental health. Since students have these loans for many not being employed is not an option. It was also found that students who work join fewer university societies. Not being involved in the university environment will then have a negative impact on the students’ experience of that university (Cooke et al., 2004).

Implementing this policy issue will help alleviate what has been a strong financial impact on the economic system of the United States. It affects both private institutions such as banks and the government due to state of loans that are originated. Most student loans come with an interest rate and all debts have to be repaid. When individuals cannot afford to repay their loans and fall behind on their bills, this leads to a bigger financial burden. According to the Federal Reserve Bank of New York, the student loan delinquency rate is now at 11.6% (NY Federal Reserve Bank Press Briefing). This means that 11.6% of all individuals who have student loan debt fall behind on their payments. The impact that this has is an ongoing increase of debt among individuals within the nation.

Having a policy change in this country and allowing all American citizens the right to a free four-year bachelors degree in both public college and universities will remedy the second largest class of consumer debt burden. There are other countries such as Germany, France and China that use tax money to fund free University for their citizens. One solution that is open for debate is imposing a tax to help pay for a four year degree. This is something that Bernie Sanders referenced as he campaigned to be the next president of this country.

Mr. President, I thank you for your time and attention in this matter. As you and I both understand this is a subnational problem in our nation and a burden on millions of citizens. I want to express my willingness and initiative in finding a solution to this problem by implementing the tuition free bachelor degree policy

Works Cited

CHOI, Yeseul. "Debt and College Students’ Life Transitions: The Effect of Educational Debt on Career Choice in America." (n.d.): n. pag. Web. 7 Sept. 2016.

Christie, Hazel, Moira Munro, and Heidi Rettig. "Making Ends Meet: Student Incomes and Debt." Studies in Higher Education 26.3 (2001): 363-83. Web.

Cooke, Richard, Michael Barkham, Kerry Audin, Margaret Bradley, and John Davy. "Student Debt and Its Relation to Student Mental Health." Journal of Further and Higher Education 28.1 (2004): 53-66. Web.

"Digest on Educational Statistics." National Center for Educational Statistics, n.d. Web.

Dwyer, R. E., L. Mccloud, and R. Hodson. "Debt and Graduation from American Universities." Social Forces 90.4 (2012): 1133-155. Web.

"Federal Reserve Bank of New York: Outsourcing Financial Services Activities." Bankrechtstag 2000 Funktionsauslagerung (Outsourcing) Bei Kreditinstituten (n.d.): n. pag. Student Loan Borrowing and Repayment Trends, 2015. Federal Reserve Bank Of NY, 16 Apr. 2015. Web.

Protection Bureau, Consumer Financial. "Student Loan Servicing Analysis of Public Input and Recommendations for Reform." Http://files.consumerfinance.gov/f/201509_cfpb_student-loan-servicing-report.pdf. CFPB, Sept. 2015. Web. 7 Sept. 2016. 2015, September. (n.d.): n. pag. Web.