The Ever-Increasing Cost of Higher Education

The Ever-Increasing Cost of Higher Education

Previous generations, such as baby-boomers and Generation ‘X’ can remember getting through college, earning a 4-year degree, all while accumulating little to no debt in the process. Today, a much harsher reality is coming to light. In today’s reality, student debt accounts for more than 1.4 trillion dollars, more than auto-loans or credit card debt. And it is only increasing and an alarming pace. 

Background

According to CollegeBoard,the average cost of obtaining a 4-year degree was roughly $1,400 per year in 1971 ($8,000 when adjusted for inflation). This price was equivalent to roughly 15% of the median household income at the time. However, since the early 1970’s, household income has increased only slightly, while the percent increase in tuition and tuition related expenses has more than doubled. In 2018 the average cost of one year at a 4-year university was roughly $22,000, which is almost 35% of the median household income in 2018. 

Statistics

And it is only more shocking the amount of Americans who carry a student loan. According to the government, 1 in 4 adults in the United States have active student loans. And of these loan carriers, the average student graduating from a 4-year institution in 2018 is leaving school with an average of $37,000 in student loan debt – which is enough to use as a down payment on a house! 

Diving in a little deeper we can see that the year over year increase in cost of tuition equates to about 2.6% a year, which might not seem like a lot. However, this must be compared to another number, 0.3%. This represents the average rise in salary year over year since the 1980's. Now we can see why it has been hard to keep debt levels low! 

The Future

The debate rages on in regards to how to tackle this ever-increasing social crisis, before it tackles the economy. Some have suggested forgiving the loans, others have suggested to allow for refinancing for lower interest rates is sufficient enough. Some states and schools however have taken matters into their own hands. In 2017, New York State made a land mark decision to offer free in-state tuition at public 4-year universities to residents with take home incomes of less than $100,000. At the same time, New York University made their medical school tuition free for all students, regardless of income. Private companies have also realized the problem and begun stepping in, allowing for student loan reimbursement as a part of their employment packages. 

Although these are all positive steps forward, they alone are not enough to quench the raging fire of student loan debt levels. As every year passes, more and more schools continue to raise their tuition. And it becomes near impossible to put out a fire which is constantly being fed with more fuel. In order to bring a halt to this epidemic, more drastic measures must be taken, before the student loan debt situation becomes the next housing crisis of 2008.