Most of us wanted to have a good life. We tend to visualise a certain degree of quality in our life. The first thing that comes into our minds is to have a good education. As much as we desire this, it means, we need to go to the highest level of education possible to get a good life. We need an education loan to achieve this.
To date, education is a brand or label in the industry. We often look for famous universities. For instance Ivy League. We tend to choose this due to the hiring process in the company that we aiming to work with. This particular company prioritises well-known universities. As it is associated with producing great quality students.
Cost for Orthodontics for instance will cost you USD 95,000 a year. Then, only 3-4 seats are available. Therefore, making the enrolment process very competitive. University may make a handsome revenue here. This is the cost for us if we wanted to go to a famous instead of a great University that might be a cheaper option to acquire the right skills and produce the same output in the future.
Something needs to be revamped here.
Education loan among American today stands at USD 1.75 trillion for 43 million borrowers . That is equivalent to USD 41,000 in debts for each American citizen. This escalating loan is not a surprise as the cost of going to University has skyrocketed since 1980. From merely USD 8,000 in 1980 to USD 23,000 as of 2021. That is 2.6% of the CAGR. It’s huge!
An education loan also commands a huge Interest Rate. From 5% per annum. As compared to Malaysian loans by PTPTN, this is 5 times ours. This kind of rate may resemble a payday loan. Which is start from 5% and up to 30%. With the rising cost of education then coupled with the ability of American purchasing power, it is hard to find a reason to go to a famous university like Ivy League did. This is also the reason why Barrack Obama finished paying off his education loan only at 42 years old! 
Most of the mistakes that Americans did was that they did not know where to look in the first place when it comes to making decisions by going to University. Let alone making an adult decision at such a young age! 18 year old kid, don’t really aware of the financial impact that he has made will affect him during their employment days. Personal Finance is a global issue.
If you are asking for advice from your father or grandfather, surely they will choose the easiest path. By going to a University. Back then it was true as education costs merely USD 8,000. Most American can afford to fund their education. Nowadays, no longer sustainable to do so.
American need to find their sense of purpose. Ours too. Why do we need to go to University?
If you decided to go to University in this current situation, most likely you will:
- American dream: working to pay off debt
- Living paycheck to paycheck
- Rat race culture
Higher education has become a thing while everything else is just an alternative to our life’s objectives. We go to university to make more money. Supposedly. At the same time trying our best to fit into social norms. The university is synonymous with being successful in life.
Education has shifted from public good to private good by enriching Sallie Mae. By doing this, we are living but not alive. Ultimately it will have a lasting impact on graduates and our kids.
You may watch more about it here on Borrowed Future. Here it is.
- The White House
- Daily Mail
- Board of Governer of The Federal Reserve System
- Sallie Mae