You are not a-Loan
Nyx Protocol is going to take on the worldwide student debt problem. In a series of articles, we will present the issues negatively impacting the students of the world, along with the solutions Nyx provides to address them. In this first article, our purpose is presented.
Many countries offer free college tuition. Greece, Scotland, Denmark, and Argentina, to list a few. Unfortunately, in the majority of countries, this just is not true. Even if the college tuition is free, expenses such as housing, food, and entertainment are not covered. In those cases, and for a variety of other reasons, students take on debt during their college career and one day those debts will become due.
University-related debt is quite a large issue in many first-world countries. One in six Japanese graduate students have more than 3 million yen in debt, which is approximately $30,000 U.S. dollars. This is according to a 2020 survey conducted by Japan’s Ministry of Education. Additionally, it is noted that the risk of debt dissuades students from entering graduate programs.
In Australia, a nationally representative survey of 1,003 respondents found 28% of Australians — equivalent to over 5.4 million people — still have debt in student loans. Of those in debt, 18% have more than $10,000, 8% have more than $40,000 and 3% have more than $100,000. Kate Browne, a personal finance expert at Finder, said student debt is skyrocketing and can take its toll on the mental health and financial stress of Australians. Finder.com. Article titled, “You are not a loan.”
The United States is by far the biggest market for student loans. This is directly linked to the more than 500% increase in tuition since 1985 according to Student Debt USA. With the traditionally most lucrative employment opportunities on the wane and competition for them becoming ever more intense and living wage menial jobs virtually extinct, many people feel they have no choice but to take out loans to get their college degree. In fact, according to a CNBC article from May 16th of 2019, “Nationwide, college student loan debt was $517 billion in 2006. There are more than 44 million borrowers who now collectively owe $1.5 trillion in student loans, according to the latest statistics for 2019.” Of those borrowers, roughly 7 million are in default, and being overwhelmed by debt is epidemic among millennials, as 40% who have student loan debt are in default. The increase in student debt load while wages have been stagnant for the better part of four decades is staggering and creates severe challenges when it comes to participating in the most common milestones of life.
Lately, we seem to be hearing about the student loan crisis with increasing frequency, and it is no wonder. Providing loans to students serves many benefits, along with the traditional downsides.
The truth is student loans are necessary for society. Student loans give access to education to the underprivileged. Although the government provides students with financial aid, it is rarely enough. Having more workers in the workforce with higher education promotes growth, and innovation and typically equates to higher productivity, especially in white-collar and professional vocations. Beyond the statistics, attending college creates a more secular, free-thinking, well-rounded individual.
Conversely, university tuition is expensive. Really expensive in some cases. This leads to loans that resemble housing mortgages. Private lenders prey on naïve students with high-interest rates, often breaking their backs and bank accounts. To combat this, many governments subsidize these loans to reduce the interest rate. This does not reduce the principal, to be clear. Doing this further puts governments into further debt from defaulted loans and simply taking on these responsibilities. In many cases, student borrowers are left with no choice but to default on these loans. Doing so sends them spiraling into negative credit scores and being forced to take on more bad debt. It can be a vicious cycle. Unfortunately, these loans cannot be removed or modified in bankruptcy proceedings. A future article will discuss this conundrum. Lastly, and perhaps most importantly, the toll these burdens take on one’s anxiety and well-being can be disastrous.
Nyx will attempt to immediately augment and later take over this sector. Each weekly article will show how Nyx will tackle these problems. We are here with you. You are not a-loan.
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-written by JoshuaH, team NYX
