Federal Government's Impact on the Rise of Research Proposal

Federal Government's Impact on the Rise of Student Loans

On the surface, student loans seem like such a beneficial and risk-free government program that there appears to be no reason to object to them. After all, the purpose of federally subsidized student loans is to give students who might not otherwise have a chance to get a post- high school education the chance to get that education. College degrees, vocational certificates, and graduate degrees all expand a person's earning potential, and, theoretically increase the likelihood that the person will elevate, not only his or her own financial status, but also the status of his immediate family. Therefore, the federal government subsidizing student loans seems like an efficient and responsible use of government money. However, further investigation suggests that student loans may simply be a way of shifting a tax burden into groups that are basically tax-immune. Therefore, the appropriate policy question is: is the federal government's involvement in student loans beneficial or detrimental to the U.S. economy?

Even if student loans can be a great use of government money, one still has to wonder why the federal direct student loan program has grown so dramatically in the last two years.One explanation is that rising unemployment rates have prompted people to return to school to improve changes at employment. However, the fact that there are some non-traditional students returning to school does not completely account for the rise in direct student loans. First, there has been an increase in direct federal direct student loans. College tuition has been on the rise, which has prompted people to borrow more money. The result is that more students are carrying a student loan burden, and the average amount of those loans is approximately double the average amount owed by people only a few years ago. In addition, more people are defaulting on student loans, which saddles the government with the burden of repaying the loans, since they are either federally subsidized or direct government loans; default means that the government loses that money.

In fact, is important to keep in mind that federal student loans form a significant part of the growing….....