Student loan plans will lead to greater inequality among gen Z students

There’s a heaviness that comes over me when I think about the student loan crisis, particularly for Gen Z students who are just stepping into the world of higher education. It’s like a dark cloud that hangs over the bright, hopeful future we tell young people to dream about. We say, “Go to college. It’s your ticket to a better life,” but more and more, that ticket feels less like a golden opportunity and more like a life sentence of debt. And now, with the latest student loan plans, it seems like the gap between the haves and the have-nots will only widen, leaving many Gen Z students behind in a race they never stood a chance to win.

The Weight of Debt

When I was in college, student loans were already something people whispered about with a mix of fear and resignation. But for Gen Z, the situation feels even more dire. College tuition has skyrocketed, and while wages have stagnated, the cost of getting a degree keeps climbing higher and higher. For a lot of students, it’s not just about how much debt they’ll take on—it’s whether they can afford to go to college at all.

I remember talking to a younger cousin of mine, who is just starting her college journey, and she told me about the financial aid packages she was looking at. She had this excitement in her voice—she’s the first in our family to even think about going to a prestigious school—and then, suddenly, there was this pause. “But the loans,” she said, her voice dropping. “I don’t know if I can handle it.” She’s 18, and already, that weight is sitting heavy on her shoulders.

The reality is, not all Gen Z students will feel that same weight. For those who come from wealthier families, the burden of loans isn’t quite as crushing. They can afford to go to the best schools without having to think twice about it. But for students from lower- and middle-income backgrounds, the new loan plans feel like a trap. It’s a trap that will see some students walk away with degrees and debt they’ll struggle to pay off for decades, while others sail through without ever feeling the pinch.

A System Designed to Create Inequality

What’s particularly worrying about the current student loan plans is how they seem almost tailor-made to increase inequality. Let’s break it down. On the surface, these plans might look fair—after all, everyone is technically eligible for student loans, right? But dig a little deeper, and you start to see the cracks.

First of all, interest rates. For many students, the moment they take out that first loan, the interest starts piling up. Even before they’ve set foot in their first lecture hall, they’re already sinking into a pool of debt that will only get deeper. Now, imagine two students: one from a wealthy family and another from a lower-income background. The wealthy student might still take out loans, but they have family resources to pay them off quickly, often before interest makes any significant dent. Meanwhile, the other student will likely graduate with a mountain of debt that grows year after year.

Even more insidious are the income-based repayment plans. These plans, which are supposed to make repaying loans more manageable, often end up locking students into decades of payments that barely make a dent in the principal amount. I read about a student recently—let’s call her Sarah—who took out loans under one of these plans. She thought she was doing the right thing, trying to make small, manageable payments as she started her career. But five years later, her loan balance was actually higher than when she graduated. The interest kept accumulating, and Sarah’s modest income just couldn’t keep up.

For Gen Z students, especially those entering lower-paying fields, this could be the norm. And let’s not forget, many of the jobs they’ll be entering won’t even pay enough to live comfortably, let alone pay off loans. It’s a vicious cycle: graduate, start working, struggle with rent and bills, and then watch as your student loan balance grows instead of shrinks.

The Emotional Toll (Student loan plans)

One of the things that often gets overlooked in discussions about student loans is the emotional toll it takes. Debt is more than just numbers on a page. It’s stress, anxiety, sleepless nights. It’s the voice in the back of your head reminding you that every choice you make—whether it’s taking a job you love, moving to a new city, or even just buying a car—has to be weighed against the burden of that debt.

I’ve seen it in friends, in family members, in myself. The way debt hangs over you, affecting every decision you make. For Gen Z students, this kind of financial pressure could affect their mental health in profound ways. I think about my cousin, who’s always been so bright and full of ambition, and I wonder how the looming shadow of loans will change her. Will she feel that same spark of excitement about her future, or will it start to fade as the weight of debt bears down on her?

The thing is, it’s not just about money. It’s about opportunity, freedom, and the ability to make choices. When you’re drowning in debt, your choices narrow. You might have to take a job you hate just because it pays more. You might put off buying a house, starting a family, or even moving to a city you love because you can’t afford it. And for some Gen Z students, the weight of debt might even push them to drop out of school altogether, feeling like the whole system is rigged against them.

A Wider Divide

One of the most devastating effects of the current student loan system is how it exacerbates the divide between wealthy and less wealthy students. It’s not just about who can afford to go to school—it’s about who can afford to live the life they want after they graduate. For some students, their family’s wealth will act as a safety net, allowing them to take risks, follow their passions, and pursue careers that might not pay as well but bring them fulfillment.

For others, the burden of debt will force them to take a more practical, less fulfilling path. And over time, this creates a two-tiered system. The wealthy students, free from debt, can afford to take unpaid internships, travel, and explore different career paths. They have the freedom to fail and try again. Meanwhile, the less wealthy students are locked into jobs that may pay the bills but leave little room for passion or growth. The gap between the two widens, and the promise of social mobility that education is supposed to offer becomes nothing more than a broken dream.

I think about one of my friends from college who came from a low-income background. She was incredibly smart, driven, and passionate about social work. But after graduation, her loans weighed heavily on her. She wanted to work for a nonprofit, helping underprivileged communities, but the starting salaries just wouldn’t cut it with her debt. Instead, she ended up taking a corporate job she wasn’t passionate about, just to make ends meet. The dream of making a difference had to take a back seat to the reality of her financial situation.

What Can Be Done? (Student loan plans)

It’s easy to feel hopeless when you look at the current student loan landscape, but there are solutions—if only we’re willing to put in the work. First and foremost, we need a student loan system that doesn’t penalize students for wanting to better themselves. This means lowering interest rates, offering more flexible repayment options, and, most importantly, addressing the root of the problem: the astronomical cost of education itself.

In countries like Germany and Norway, higher education is either free or heavily subsidized, and the idea that students should be crippled by debt just to get a degree is almost unthinkable. Why can’t we move in that direction? Why should the next generation be saddled with more debt than their parents, just for the chance to get an education?

For Gen Z students, real change can’t come soon enough. Without it, we risk creating a generation that’s even more divided by wealth, even more burdened by debt, and even more disillusioned with the idea that education is the great equalizer. And that, to me, is the real tragedy of the current student loan system.

I don’t want my cousin—or any of the bright, ambitious young people out there—to feel like their dreams are limited by something as unfair as the cost of an education. But unless we make some serious changes, that’s exactly what’s going to happen. The future should be full of possibilities for these students, not weighed down by the crushing burden of debt.