After College, A Life without Debt?

Student loans, for more than half those attending college, are the new paradigm of college funding. Consequently, student debt is, or will soon be, the new paradigm of early to middle adult life. Gone are the days when the state university was as cheap as a laptop and was considered a right, like secondary education. Now higher education is, like most social services, a largely privatized venture, and loans are the chief way that a majority of individuals pay for it.

Over the past decade, there has been an avalanche of criticism of the "corporatization" of the university. Most of it focuses on the impact of corporate protocols on research, the reconfiguration of the relative power of administration and faculty, and the transformation of academic into casual labor, but little of it has addressed student debt. Because more than half the students attending university receive, along with their bachelor's degree, a sizable loan payment book, we need to deal with student debt.

Printed with permission from Dissent Magazine.

The average undergraduate student loan debt in 2002 was $18,900. It more than doubled from 1992, when it was $9,200. Added to this is charge card debt, which averaged $3,000 in 2002, boosting the average total debt to about $22,000. One can reasonably expect, given still accelerating costs, that it is over $30,000 now. Bear in mind that this does not include other private loans or the debt that parents take on to send their children to college. (Neither does it account for "post-baccalaureate loans," which more than doubled in seven years, from $18,572 in 1992-1993 to $38,428 in 1999-2000, and have likely doubled again).

Federal student loans are a relatively new invention. The Guaranteed Student Loan (GSL) program only began in 1965, a branch of Lyndon B. Johnson's Great Society programs intended to provide supplemental aid to students who otherwise could not attend college or would have to work excessively while in school. In its first dozen years, the amounts borrowed were relatively small, in large part because a college education was comparatively inexpensive, especially at public universities. From 1965 to 1978, the program was a modest one, issuing about $12 billion in total, or less than $1 billion a year. By the early 1990s, the program grew immodestly, jumping to $15 billion to $20 billion a year, and now it is over $50 billion a year, accounting for 59 percent of higher educational aid that the federal government provides, surpassing all grants and scholarships.

The reason that debt has increased so much and so quickly is that tuition and fees have increased, at roughly three times the rate of inflation. Tuition and fees have gone up from an average of $924 in 1976, when I first went to college, to $6,067 in 2002. The average encompasses all institutions, from community colleges to Ivies. At private universities, the average jumped from $3,051 to $22,686. In 1976, the tuition and fees at Ivies were about $4,000; now they are near $33,000. The more salient figure of tuition, fees, room, and board (though not including other expenses, such as books or travel to and from home) has gone up from an average of $2,275 in 1976, $3,101 in 1980, and $6,562 in 1990, to $12,111 in 2002. At the same rate, gasoline would now be about $6 a gallon and movies $30.

This increase has put a disproportionate burden on students and their families -- hence loans. The median household income for a family of four was about $24,300 in 1980, $41,400 in 1990, and $54,200 in 2000. In addition to the debt that students take on, there are few statistics on how much parents pay and how they pay it. It has become common for parents to finance college through home equity loans and home refinancing. Although it is difficult to measure these costs separately, paying for college no doubt forms part of the accelerating indebtedness of average American families.