Recently, several major banks – including Citibank, JPMorgan Chase, PNC and Suntrust – are cutting back loans given to students who attend community colleges, for-profit universities and other less competitive institutions. Students all over the country are finding out they have to search for a new lender. The banks claim they are stopping certain loans with lower balances and shorter periods over which the banks can earn interest. Of the 6.2 million students who attend community college in the nation, about one-third of them have loans, according to College Board. Because of the loan cutbacks, students will be forced to take on another job or accrue larger credit card debt. The federal government is not making any changes in its loan programs. Sallie Mae and Nelnet will continue giving federal loans to students regardless of where the students choose to go. Two problems immediately come to mind. First, the banks aren’t going to make any money off loans they don’t have. What harm was being done by the students at community colleges who had loans? They were paying interest; the bank was making some money. Also, students are probably never going to take loans from these banks in the future because the banks hadn’t given them the loans to get an education. The second problem with the whole situation is competition. If fewer banks offer students loans, then there is less competition among the remaining banks. They can then charge higher interest rates because there isn’t as much competition keeping the rates down. It would be tragic if young people are unable to get higher education because banks were refusing them loans. Education is the key to most kinds of success. Not everyone can be a professional athlete or entertainer. Most people have to get an education and work at a job. The best-paying jobs usually require a bachelor’s degree or better. People with degrees in higher education make significantly more money than people without those degrees, according to the U.S. Census Bureau. For example, someone with a high school diploma makes on average $30,400 a year. A bachelor’s degree increases that to $52,200, and a Ph.D. will raise the average to $89,400. Education makes a substantial difference. Even a two-year associate’s degree increases income. So if banks aren’t allowing students to take out loans for associate degrees, fewer students may enroll in community colleges and for-profit schools. They may just enter the workforce and never get any form of higher education. This is upsetting for America because there will be fewer people making more money, which means the income gap will only grow. If less students attend community colleges and for-profit schools, then the schools will most likely be forced to close. The closing of several hundred community colleges across the country will undoubtedly lead to less low-income students being allowed to receive higher education. For-profit schools will probably close first because with less students it will be harder for them to turn a profit. These for-profit schools include DeVry, ITT Technical Institute and Le Cordon Bleu culinary institute. They allow low-income individuals a chance at a decent career. These schools have locations all over the country. ITT even has two locations in Louisiana – in Baton Rouge and New Orleans. The fact that in a time of economic crisis banks are cutting student loans is understandable but disgusting. It is a shame that the future of America may be harmed because less individuals will be able to get higher education. The one thing I believe in more than anything else is education. It is essential to our growth. If everyone in America had at least an associate’s degree, there would be a lot less poverty. People would be able to make and spend more money, and the economy would grow. I know what your thinking: Who would do all the low-education jobs such as janitorial jobs and food-service jobs? My answer is high school students and convicts. When I was in high school I made minimum wage. There is nothing wrong with high school students working for minimum wage to instill the values of hard work and to encourage them to do well in school and get better jobs. Convicts, not illegal immigrants, should do all the jobs that “normal Americans don’t want to do.” They could do janitorial work, garbage pick up, sewer clean up and any number of other things that “normal Americans don’t want to do.” Convicts working in this large of a capacity is unrealistic, but that doesn’t mean it’s not an idea. In this time of economic unease, the country needs to think of more ways to improve the situation. And cutting loans to students is never a good idea.
—-Contact Matthew Gravens at [email protected]