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How Did College Education Become So Ridiculously Expensive?

America wasn't always riddled with student loan debt. Here's what caused the cost of higher education to skyrocket.

The following is an exerpt from The Student Loan Swindle: Why It Happened - Who's To Blame - How The Vistims Can Be Saved. Written by Bill ZImmerman, the book explores the origins and depth of our now $1 trillion national student debt bubble, and calls for a national campaign of civil disobedience as the only means to a fair resolution of the crisis at hand. Chapter 3 of the book, "How Did College Tuition Become So Expensive," is reprinted here in its entirety, by permission of the author.

The student loan crisis is a new phenomenon. Despite its huge impact, as recently as the late 1980s there was no student loan crisis. Then, middle and working class students suffered from cutbacks and had difficulty financing their educations, but overall, while the system of paying for college was beginning to break down, it had not yet become the disaster it is today. The crisis came because in later years the cost of getting a higher education rose many times faster than the overall cost of living. To make matters worse, wages were stagnant and the real purchasing power of working Americans was in decline.

The crisis now centers on the inability of borrowers to repay their student loans, but those borrowers only needed loans in the first place because in the mid-1990s the cost of tuition escalated so dramatically. By the first decade of the new century, it virtually went through the roof. What drove this sudden and rapid increase?

When I was a young man in the late 1950s, many families could afford college even though far fewer than today thought it necessary. The son or daughter of a working class family could attend a public college or university where the cost of tuition was almost negligible, even for families with limited funds. Working class kids with enough talent could win scholarships to attend the more elite private universities, as I did. But even those private universities kept tuition low enough for middle class families to afford. I used my scholarship at the University of Chicago, one of the most expensive institutions in the country. Tuition was $870 per year when I enrolled in 1958 (just under $7,000 in 2013 dollars).

Young people in my time had access to an additional advantage students are unlikely to have today: part-time jobs during the school year and full-time temporary jobs in the summer. The extra money allowed me to pay for my own living expenses and graduate without debt and without having burdened my parents. I was typical. The robust American economy at the time allowed many students like me to “work our way through college.” That phrase sounds quite hollow today since most of those jobs no longer exist.

For the 20 years prior to the mid-1980s, college tuition roseonly gradually. Middle class families had come to understand that a degree meant greater earning power. Their children flocked to college and quickly increased total enrollment from 8.5 million in 1970 to 13.8 million in 1990. Campuses had to expand to meet the new demand. As a result, tuition increased at a rate somewhat greater than the increase in the overall cost of living. Nevertheless, the situation remained stable since costs were not going up fast enough to trigger changes in the way higher education was financed. That was no longer true by the late-1980s, when tuition began to increase at a rate faster than the overall cost of living.

That dramatic increase occurred because during this period many states developed large budget deficits. In the late 1980s and 1990s these budget deficits increased because of popular support for tax-cutting measures at all levels of government. To give voters lower taxes, states had to reduce public services. Welfare and poverty programs were cut first, but more cuts were necessary to keep the deficits under control.

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