The Disconnect with Student Loan Debt


The recent news of possible student loan debt forgiveness has created lots of chatter on social media. The pundits and experts certainly have much to say about whether it is a good or bad idea. But unfortunately nobody seems to be discussing the elephant in the room – why do students have so much debt in the first place?

There seems to be a strange disconnect in the mainstream on how students have managed to accumulate over $1.6 trillion in student loan debt. Comments from conservatives often claim the problem of high tuition costs is the result bloated administration costs, or that higher tuition is the federal government’s fault. One of the more disconnected takes is from older generations who like to state things like, “I paid my way back in the 1970s, so should today’s students.”

So what is it about the latter comment that is so disconnected?

For starters, anybody who went to college in the 1960s, 70s, and early 80s, went to school during a time when the state and federal governments funded public education at a much higher level, thus making tuition cheap.  This is an indisputable fact. A great example of this decrease in government funding can be seen from a report completed by the state of Colorado. It’s an older report from 2015, but it nonetheless proves my point.

The report clearly shows how when the state of Colorado decreased its funding by 32% over a five-year period that tuition rose nearly the same amount at Colorado’s public universities. In other words, the five years of cuts to higher education funding by the state legislature translated to higher tuition costs for students.  It also shows that cuts to funding were happening before the Great Recession. The other interesting thing that the report shows is how capital construction costs used to be funded by the state as well.  However, this funding was replaced by “student fees.”  These student fees are costs incurred by the students that are above and beyond the cost of tuition.  So not only are today’s students having to pay much more of their share of tuition costs than did the older generations, but they also have to help pay for capital construction costs. Thus students need to take out larger loans to help pay for higher tuition costs and help pay for capital construction costs.

In 1970, the average tuition cost for a year was $1,287.  In 2007, the average tuition costs for one year had risen to $11,034.  This equates to a 994% increase in the cost of tuition for a four year degree!  In Colorado, this excludes the 32% rise in tuition over the eight years, so it is now over 1000% more expensive than in 1970.

The second factor that shows a disconnect with the older generations who say things like, “I paid my way through college when I was a kid” also overlooks the problem of the cost of housing and the minimum wage during these times. The minimum wage in 1970 was $1.60 per hour, and today it is $7.25 per hour.  A $1.60 minimum wage is the equivalent to $11.76 in today’s dollars. Furthermore, the federal minimum wage is actually worth less than what it was worth 50 years ago. The third factor that shows a disconnect is ignoring the fact that the median cost of a house in 1970 was $23,600.  And in 2011 (after the housing downturn) the median cost of a house is $240,100.  This is an increase of 917%.

So we have tuition that has increased over 1000%. We have minimum wage jobs that provide less purchasing power for people today than 50 years ago. And we have a cost of living that has increased about 917%. So tell me, how do we expect today’s students to pay their way through college? Very few can. So they take out loans – loans which are much much larger than anything a person going to school in the 70s had to take out.

The math is pretty easy to figure out that it is now impossible for today’s students to do as the older generation was able to do.  Today’s students can no longer work a minimum wage summer job, nor even a full time low wage job, to pay for tuition and housing costs.  Thus the only way for most of today’s students to pay for a very expensive higher education is through student loans.

This really isn’t rocket science, folks. We have a system that has shifted the burden of paying for higher education onto the individuals. Somewhere, decades ago, America’s power brokers decided to commodify higher education and put the burden on the individual. It has failed our country dramatically. The proof is the $1.7 trillion dollar of student loan debt, a weight that is not just weighing heavily on individuals but on our entire economy.