Student Loans Research Paper

Many students invest in their future by making the decision to go to college, therefore, taking out student loans as a means to finance that decision. When contemplating the decision to borrow money, there is an overbearing responsibility to repay the loan. Interest rates are a significant component when taking out loans. The percentage rates of interest can vary depending on the diverse types of loans, including car and mortgage loans, being called into question. For student loans, this interest rate percentage is considerably higher than other types of loans due to the factors that include the United States Congress, collateralization, and increased risk to the lender. First of all, to determine interest rates falls to the jurisdiction of the United States Congress. The latest legislation, passed by Congress and signed by President Barack Obama, was the Bipartisan Student Loan Certainty Act of 2013. As a result, interest rates are influenced by financial markets; more specifically, it is based on a 10-year treasury note. Once interest rates are set every spring, the rate is fixed for the life of the loan …show more content…
The underlying reasoning for a student to take out loans is because of their goal to achieve a career with a salary that gives them the ability to pay back those loans. While many students are capable to achieve this goal; around 70 percent of Americans study at a four-year institution, yet less than 66 percent will graduate (Beckstead. para. 1). This type of uncertainty drives interest rates high for student loans particularly then other types of loans. Many students with entry-level positions may still feel the burden of their accruing student debt. For example, the consequences of high interest rates may drive students to rely on loan forgiveness plans; yet, the requirements are strict and difficult to be eligible