How financing a college education has changed at the expense of students

Earlier this month The Institute for College Access and Success released a new bi-partisan survey revealing that young adults aged 18-34 find that a college degree is more important that ever before, but that it is also harder to afford.

About 76% of respondents find college harder to afford in the past five years and 73% think that graduates have unmanageable amounts of student debt. Given this, about 80% still find higher education more important than a generation ago.

The most telling aspect of the study is that at least 70% of young Republicans, Democrats and Independents all agree that making higher education more affordable should be priorities for Congress. Education has continually fallen in rank as a national priority, despite the fact that in today’s work environment a college degree has become par for the course, and the effects of this are indiscriminate of political ideology.

However, it didn’t always used to be this way. Fundamental change to the lending system in the 1990s and critical changes to bankruptcy law in 2005 gave lenders the upper hand. Lenders now face very little risk on the money they lend, have unprecedented powers for collection & can count on student loans to not be discharged through bankruptcy.

This is why young adults today find college education harder to afford today than it was for the previous generation. A 1970 minimum wage earner would need to work 14 hours a week to earn enough money to pay for public schooling. Today’s minimum wage earner would need to work 35 hours a week to pay for public schooling.

In 2010, the average cost for an in-state public college averaged 20,339. This of course not only includes tuition, but also room & board, books, school supplies, transportation and other things that drive total college costs up higher and make them harder to pay off with a part-time job. Obviously, a student taking on a full course load could not possibly meet 35 working hours a week. However, if they were somehow able to work the full 35 hours a week (at the minimum wage rate of $7.25), every week, a student would still only make about $13,000 in a calendar year. This doesn’t come close to being enough for students to cover the full costs of what it takes to obtain a college degree. If working a job while attending a public school wont cover college costs, imagine attending a private school like Marquette University and coping with that tab, where the annual total costs of attendance is $39,676, just under the national average for private schools.

Today’s student is feeling financial pressures that students in the last generation did not. The average tuition at public four-year colleges and universities is $5,836, a 268% increase from 1976-77. Private education has risen to $22,218 since then, a 248% increase. Despite this, student grants have declined sharply, covering only 39% of college costs compared to 80% of costs in the mid-1970s. Today’s student hears stories from parents about how they went to school and were able to afford it because of assistance like the Pell Grant. Because college costs are rising so quickly, the maximum Pell Grant now covers only about a third of the average costs of attending a public university, compared with three-quarters in the 1970s, when the program began.

Students have had to make up the gap in costs with student loans. In 2007-08 53% of full-time students borrowed to finance college, compared with 34% in 1977.  High tuition rates, increases in borrowing and the changes to the law regulating the lending industry, has resulted in the crisis we see today as the nation’s total student loan debt will reach $1 trillion before the end of the year.

A college degree is now expected of students entering the workforce, but it does not guarantee earnings that will be needed to pay off the increasing cost of the degree. Things have changed so much that en mass students are now going deep into unmanageable debt to obtain a degree, something that was unheard of for the previous generation.

The lobbyists of the lending industry, whose influence over the last 30 years has compromised the education system, have created a world in which 18 year old freshman take on a lifetime of financial burden before they even get started out on their life journey.