Understanding Financial Barriers in Education

"Student loans are supposed to be repaid — so what’s the big deal?" Dr. Higher Education Colleagues, here’s the big deal: Student loans aren’t like car loans or mortgages. They represent a promise — one that many low-income students, minorities, and your everyday American were encouraged to believe: go to college, and you’ll have a better life. We were pushed toward higher education by well-meaning families who lacked financial literacy, by teachers who insisted college was the only path to success, and by recruiters whose job was to boost enrollment, because colleges are businesses that depend on students to survive. And to make it harder, most decent-paying jobs require a degree, even when it isn’t truly necessary. That pressure pushed many of us to pursue education at any cost, without understanding the long-term consequences. When I entered college, there was little help connecting majors to future earnings, navigating financial realities, or exploring broader career paths. I didn’t start understanding my options until I was about to graduate — after I had already taken on debt. Here's the reality for many: -We pursued and pursue majors without knowing their financial outcomes. -We need years of experience just to qualify for jobs in our fields. -Even when we get hired, the salaries often aren't enough to live on — much less repay loans. It’s not that people don’t want to pay back their loans — many simply can’t. The promise of a degree hasn’t been delivered for everyone, and the data makes that painfully clear. Now that the true cost of education is being questioned, and more people realize the system doesn’t always deliver on its promises, we have to ask: Where will colleges and universities be in the next few years, now that the jig is up?

Granting federal-backed student loans to minors under 18 years old is predatory lending. Mandating that students pass comprehensive financial literacy coursework before allowing children to commit to student loan debt is one approach to ensuring ethical lending practices. https://lnkd.in/gp8ekWbV Video Cliff Notes Before turning 18, minors face strict financial limitations, such as being unable to open bank accounts or obtain credit cards. However, they can still secure federally backed student loans without parental consent. This issue stems from the Higher Education Act, which allows those under 18 to access federal student aid , binding them to long-term debt they may not fully comprehend. Most 17-year-olds lack basic financial literacy, making them ill-equipped to handle student loans. This situation raises concerns about predatory lending practices targeting vulnerable minors that lack the knowledge needed to make informed financial decisions. As of 2024, U.S. student loan debt totals $1.7 trillion, surpassing auto and credit card debt. The average student loan debt is $37,797, significantly higher than credit card debt. Many borrowers are not fully informed about the complexities of repayment, leading to high default rates and financial stress. In 2019, pre-COVID, 11% of student loans were over 90 days delinquent, a rate higher than that of credit cards and auto loans. Student loans also differ from other debts because they don’t consider a borrower’s future earning potential based on their field of study. This can lead to graduates, especially those from less lucrative fields, struggling to repay their loans. About 33% of college students drop out, often with debt and no degree, and 45% of graduates are in jobs that don’t require a degree within ten years, questioning the value of their education. This situation creates a concerning precedent for how young people manage money. Unlike credit card debt, where the financial impact is immediate, student loan repayment is deferred, delaying the reality of debt until after graduation. This delay hinders the development of critical financial management skills, leaving young adults unprepared for financial responsibilities. To address these issues, comprehensive financial education is essential before minors can take on student loans. Course outcomes should measure the capability of students to make sound financial decisions. Schools and the federal government, both of which benefit from student loans, should fund these educational programs to prepare students for future financial challenges. Lending significant amounts of money to minors without ensuring their financial competence is unethical and potentially harmful. Protecting the next generation from long-term financial burdens requires ensuring they are fully informed and capable before taking on student loan debt.

In 2024 student loan forgiveness was the headline, and today it’s ‘Education Department to resume seizing wages for student loan debt’. This isn’t just a financial headache—it’s a massive burden, and it’s going to hit Black and Latino communities hardest. Here’s why: Black and Latino borrowers have been defaulting on student loans at higher rates than their White peers for years. According to Pew Charitable Trusts, 50% of Black borrowers and 40% of Latino borrowers have defaulted, compared to just 29% of White borrowers. What’s even more concerning is that Black students are more likely to have relied on federal loans to finance their education in the first place. This isn’t coincidence—it’s the result of systemic inequalities like lower wages, job instability, and the challenges of navigating an often confusing student loan system, especially for first-gen college students. As an educator, I see firsthand how hard students work to get an education, and it’s heartbreaking to watch them face these roadblocks. Education is supposed to be the key to breaking generational poverty. But for so many, student loan debt has become another barrier instead of an opportunity. If we don’t address this, we’re only making it harder for these communities to move forward. We need real solutions—things like more accessible repayment plans, financial literacy programs, and reducing the cost of college. Let’s not keep putting up roadblocks for people who are just trying to build a better future. This isn’t just a debt issue—it’s an equity issue. And it’s time we start treating it that way. #StudentLoans #Equity #Education #OpportunityForAll #StudentLoans #HigherEducation

From the "things that make you go hmmm" department: Jonathan Joshua's recent Law360 piece on student lending sheds light on some disturbing practices: It reveals that some universities delegate financial aid decisions to third-party enrollment management companies, who determine which students get grants and which ones get high-interest loans. Moreover, many universities withhold transcripts from students with outstanding debts, a practice that can block their career or further education paths. The increasing financialization of college, marked by complex financial products, is obscuring the true cost of obtaining a degree. When education becomes a financial maze, students pay the price – with their wallets, their futures, and their dreams. https://lnkd.in/gdm5gEtR

43 million people have stopped out of college before earning a potentially life-changing credential, according to a new report from the National Student Clearinghouse Research Center. This begs the question: What's standing in their way?    Ellucian recently surveyed 1,500 learners including high schoolers, college students, graduates, "stop-outs," and individuals who never enrolled to understand the drivers and barriers to enrollment and completion. What they discovered is that learners aren’t opting out—they’re being left out.   Among the findings:  - 56% of non-enrollees cite financial uncertainty as the top barrier  - 60% of stop-outs would return with a clear path to completion  - 79% see value in non-degree programs once they know they exist For pathways to lead to opportunity, they must be accessible, navigable, and completable. As Gallup's Stephanie Marken recently shared with me, challenges like these are inherently fixable, and that should give us all hope.