Since 1980 the cost of college tuition has tripled while the average income has remained basically the same. As a result families have struggled to send their kids to college at a time when a college education has become more critical than ever to even just being able to survive in the job market.
The result has been an explosion in student loan debt, and it’s starting to wreak havoc on the economy. Many experts are warning that this is an economic bubble that is going to burst, much like the housing bubble.
Crushing student loan debts are preventing people from being able to participate in normal economic activities like buying homes and cars, and it is even preventing people from being able to participate in crucial consumerism habits like buying gifts during the holidays. There’s a mounting call for student loan forgiveness, if not to unburden individuals from their crushing debt to save the economy from another potential collapse.
What’s behind the rise in tuition?
It’s easy to point to decreased funding for public colleges and universities, and while that’s the main culprit it’s actually a lot more complicated than that. In the 1980s there was an economic recession that left many state budgets extremely tight.
The shortfall eventually made its way to colleges and universities, which responded by raising tuition. So much of the burden of the cost of college fell on the students that colleges and universities had to compete for them (think: what am I getting out of this arrangement when I write you a huge tuition check?).
As a result they started offering scholarships, recruiting better faculty, and improving facilities to attract students. Tuition continued to rise, and funding from the state and federal governments slowed to a trickle.
The Student Loan Swindle breaks it down: “Looking just at the years between 2007 and 2012, tuition at public four-year colleges has gone up by more than 15% in 40 states, more than 25% in 18 states, and more than 50% in seven states. California and Arizona increased their public university tuition by more than 70% between 2007 and 2012.
Across all public institutions of higher education in the nation in 2011-12, state funds appropriated for colleges and universities fell by a staggering 7.6% – in a single year! The Center for the Study of Education Policy claims that is the largest annual drop in half a century. Cuts like these are the engine driving the tuition…