Student Loans: The Consequences Of Student Debt

A student loan is considered a contractual agreement between the student and the governmental lender but, the question presented is what if the student themselves lacks the ability to understand and comprehend the document in which they are signing and the consequences, present or future, associated to the student aid agreement? The federal law defines incompetency as: “When a party does not understand the nature and consequences of an agreement that he or she has entered into, the law treats that party as lacking mental capacity to form a binding contract.”
Does it mean that an individual who has no knowledge or understanding of a loan and its repercussion is deemed to lack the mental capacity making his or her student loans voidable
With all of the student debt that is accounted for an estimated 87 percent of the $1.3 trillion dollar outstanding student loan balance in the United States comes directly from federal student loans. The average age of a student throughout their collegiate career is between ages 17-25. Majority of the students receiving a secondary education take out some type of student loan during their tenure, but only about forty to forty-five percent of students actually graduate college. Sadly, the likelihood that a student was taught or had been provided any information about the student loan process prior to applying for financial aid in college or a for-profit institution is
based on representative data, seriously underestimate how much student debt they have. A significant share of undergraduate students do not understand how much they are currently paying for college, what type of loans (subsidized or unsubsidized) they have accepted, the current interest rate connected to their loans, or how much debt they are taking on upon graduation. With the average college tuition cost rises yearly with more students accepting more loans then what are essentially necessary its only getting worse. It is reported that tuition and fees have climbed thirty-percent faster than health care costs and four times (about a three-hundred percent increase) the rate of inflation since 1980. Yet, the government continues to provide more than half of all federal student loans and receives on average very low repayment rates in return. The process to receive student loan money, from the initial application to the disbursements of the loan, is in nature quicker and much more simple then the application to attend college itself. Students incur debt up to three times the tuition rate owing back in excess the amount of receiving another bachelor’s