Wow, those high levels of undergraduate debt are really bringing this country down. How much longer can this last? How long will this country stand for a situation in which college tuition increases at twice the rate of inflation? While the situation looks dire, sadly history suggests this can last a lot longer. According to an article in the New York Times:
[Education debt] worries education officials and other experts, who say that record borrowing for college threatens the financial stability of a generation of young people and their families. With college costs rising and the number of grants declining, students and their parents last year took out nearly $10 billion in Federal education loans, according to a recent Congressional report. That is almost triple the amount of a decade ago, after inflation is taken into account. It does not include billions in bank loans, second mortgages and loans from relatives.
In all, a third to a half of undergraduates are heavily in debt as they leave school and enter their lowest-earning years.
‘We should be watchful of this generation,” said Dena Stoner, an economist with the Joint Economic Committee of Congress, which issued the report on Federal loans. ”A larger percentage of their income will go toward debt for longer periods of time, while their real income may not go up.”
Just because the situation continued, of course, doesn’t mean it’s okay. What’s odd about academic debt is that, instead of addressing the issue, Americans just accepted it: college equals debt. Now students have to find a way to “responsibly manage debt” rather than just avoid it.
Who’s responsible? Well, as is often the case with articles with significant policy implications, the tendency is to assign blame the administration, whatever it is. Wilkerson wrote:
The increased borrowing comes when the Reagan Administration is seeking ways to shift the cost of financial aid programs from the Federal Government to the students who benefit from them. Administration officials say college debt is worth the investment because the average college graduate can expect to earn $640,000 more than a high school graduate over a lifetime.
Well no doubt Reagan’s policies didn’t help. ”Who should pay the bill – the student or the cab driver who didn’t even go to college?” grumbled then Deputy Under Secretary of Education Bruce Carnes, explaining why the federal government shouldn’t be expanding grant programs.
But then, in the long run it doesn’t seem to matter who is in office. Republicans or Democrats, the loans just seem to keep increasing.