Student Loans in America
Luv Jawahrani
Introduction
As a prospective university student, student loans will probably account for a significant portion of one's financial obligations throughout higher education. Its primary objective is to enable students to focus exclusively on their studies without having to work part-time to cover living costs, tuition, books, or other needs necessary to sustain a modest lifestyle.
Tuition (annual fees), particularly for universities, has been increasing globally, most notably in developed countries, with a statistical estimate of a 1.6-times increase in actual monetary value (Digest of education, 2006), owing to the fact that university personnel salaries and benefits typically increase faster than inflation ('Baumol's cost disease'). As a result, education plays a critical part in society's functioning. It allows individuals with the ability to nurture new members of the labor force to tolerate higher prices with the aim of financing a solid education investment. With postsecondary education playing such an essential role in many people's lives, it's unsurprising that many students take out loans without giving it much thought. Student loans impact nearly 44.7 million debtors in the United States alone, with a total outstanding debt of over USD 1.71 trillion.
As a result, it is essential for students and their family members to be informed of the amount of money owing to specific organizations (whether public or private) to make sound financial choices while taking out loans, which would include the payback component after they graduate. Even though the majority of student loans are subsidized, it may feel frightening to owe such large sums of money as a student without a sizable net worth, particularly for first-generation students like myself.
This piqued my curiosity in the mathematical aspect of student loans, which is relevant given that banks are economically profit-driven organizations that often find a balance between revenue and loan attractiveness. By examining loans mathematically, we may better understand and ultimately justify the sort of loan that is desirable and perhaps apply the mathematical nature of loans to future spending. I would also use the mathematics learned here to analyze and assess existing student loan programs in Singapore. To begin, we'll examine how interest is computed on a certain quantity of borrowed money.
Aim: Finding the best way to borrow and repay student loans in America
