$37,000. That’s the average amount that students graduating this year owe in student loans, making 2016 grads the most indebted in history.
Contrast this with grads 20 years ago, where most students didn’t even need to take out student loans at all, and those who did owed less than $10,000. Now, seven in 10 recent college undergrads borrow to fund their education.
We’ve all heard millions default on their loans, and that low-income folks who attended university hoping to rise out of poverty can suffer upon graduation under staggering debt. The consequences of rising student debt may be clear, but the explanation about why is more murky and ties in a variety of factors.
Here are a handful of reasons why student debt is skyrocketing more each year.
1. College Costs Grow Way Faster Than Inflation
The most simplistic answer is that college costs more today than in the past. Before you roll your eyes at the obviousness, consider the degree: Adjusted for inflation, tuition and fees at state universities and colleges have increased 230 percent since 1980, according to policy analyst Thomas Mortenson.
Even community colleges, which should be more affordable, have increased 164 percent over the last 30 years.
2. States Continue to Slash Funding for Higher Education
If states continue to cut funding for public colleges at current rates, they will be giving nothing to higher ed within the next 50 years, according to a study by the American Council on Education. This leaves U.S. college students (and their families), who mostly attend public rather than private schools for their bachelor’s degrees, shouldering increasing costs.
Oddly enough, some public universities are charging their out-of-state students three times as much as residents to compensate.
3. Universities Are Spending More on Administrative Salaries and Campus Amenties
“What is driving costs is the metastasizing army of administrators with bloated salaries, and our university presidents who are now paid as though they were CEOs running a business — and not a very successful one at that,” says Rudy Fichtenbaum, president of the American Association of University Professors, to The Wall Street Journal.
Administrative pay has indeed increased over the years. The average college president of a public university, in fact, makes nearly four times as much as a full-time professor at $428,000 a year, and some have had salaries exceeding $1 million.
Furthermore, spending on extras like new stadiums and luxury dorms also add to costs, as universities try to compete with one another and look good to alumni and donors. Cost-efficiency isn’t incentivized.
4. Students Don’t Always Understand How Student Loans Work
While to a lesser degree, we can also point a finger at the students themselves. Even though half of undergraduates don’t take advantage of all the federal loans they’re offered, one in five dollars of student loans still come from private lenders, which are often more expensive.
Part of the burden falls on the students who skim through their loans’ terms online, ignoring the fine print. Yet, universities are responsible too: Financial aid offices are notoriously understaffed, and financial literacy training is not widespread. One college CNN surveyed had five financial staff serving 4,000 students.
5. Americans Haven’t Seen a Raise in Years
Middle-class workers’ wages have stagnated over the last 30 years, while low-income workers’ pay has slightly fallen. This is an often ignored reason why student debt is so high, says Sheila Bair, president of Washington College and former chair of the Federal Deposit Insurance Corporation.
She tells MarketWatch that more people have turned to borrowing to meet that deficit, which the government has made easy.
“Debt is not the answer; real wage growth is the answer,” Bair says. “The baby boomer generation has just been too easy to default to the financial sector and credit to get things that we want without focusing on real economic growth.”
Bair touches on another frequent argument that may help explain why tuition has exploded: Access to loans may actually lead to higher tuition. Federal assistance for students has increased 50-fold since 1970, according to Richard Vedder of the Center for College Affordability and Productivity, and that has given colleges more room to raise prices.
Truthout Is Preparing to Meet Trump’s Agenda With Resistance at Every Turn
Dear Truthout Community,
If you feel rage, despondency, confusion and deep fear today, you are not alone. We’re feeling it too. We are heartsick. Facing down Trump’s fascist agenda, we are desperately worried about the most vulnerable people among us, including our loved ones and everyone in the Truthout community, and our minds are racing a million miles a minute to try to map out all that needs to be done.
We must give ourselves space to grieve and feel our fear, feel our rage, and keep in the forefront of our mind the stark truth that millions of real human lives are on the line. And simultaneously, we’ve got to get to work, take stock of our resources, and prepare to throw ourselves full force into the movement.
Journalism is a linchpin of that movement. Even as we are reeling, we’re summoning up all the energy we can to face down what’s coming, because we know that one of the sharpest weapons against fascism is publishing the truth.
There are many terrifying planks to the Trump agenda, and we plan to devote ourselves to reporting thoroughly on each one and, crucially, covering the movements resisting them. We also recognize that Trump is a dire threat to journalism itself, and that we must take this seriously from the outset.
After the election, the four of us sat down to have some hard but necessary conversations about Truthout under a Trump presidency. How would we defend our publication from an avalanche of far right lawsuits that seek to bankrupt us? How would we keep our reporters safe if they need to cover outbreaks of political violence, or if they are targeted by authorities? How will we urgently produce the practical analysis, tools and movement coverage that you need right now — breaking through our normal routines to meet a terrifying moment in ways that best serve you?
It will be a tough, scary four years to produce social justice-driven journalism. We need to deliver news, strategy, liberatory ideas, tools and movement-sparking solutions with a force that we never have had to before. And at the same time, we desperately need to protect our ability to do so.
We know this is such a painful moment and donations may understandably be the last thing on your mind. But we must ask for your support, which is needed in a new and urgent way.
We promise we will kick into an even higher gear to give you truthful news that cuts against the disinformation and vitriol and hate and violence. We promise to publish analyses that will serve the needs of the movements we all rely on to survive the next four years, and even build for the future. We promise to be responsive, to recognize you as members of our community with a vital stake and voice in this work.
Please dig deep if you can, but a donation of any amount will be a truly meaningful and tangible action in this cataclysmic historical moment.
We’re with you. Let’s do all we can to move forward together.
With love, rage, and solidarity,
Maya, Negin, Saima, and Ziggy