The Rise of College Tuition and Student Loan Debt

The rising costs of housing (until the recent bubble burst) and healthcare are mind boggling. However, it is the cost of college education that has increased the most; outpacing the CPI, housing market, and even healthcare costs. Take a look at this chart (source: Carpe Diem) comparing the changes in the CPI (index that measures inflation), housing market prices, and college tuition.

The question everybody is asking is, “why is the cost of college tuition hyper-inflating?” While colleges’ cost’s have naturally gone up over the last couple of decades due to natural inflation and the advances in technology, I don’t believe these increased overhead costs are the root of the hyper-inflation in tuition.

Student Debt

Over the last couple of decades, access to higher education has become accessible to nearly everybody, thanks to the U.S. government getting into the college financing business. In the early ‘90’s, things got really good for accredited colleges and universities when government-backed student loans became available without there being parent income restrictions. This pumped millions of additional dollars into the higher education economy as it made college financing cheap and easy. As a result colleges, not only raised costs because of increases in overhead costs, but they increased tuition costs because there was this large new resource for students to pay for tuition; in other words, “they did it because they could.”  Since then, we’ve been in a vicious circle of colleges increasing their tuition costs, then the government increasing loan limits to keep up, back to more college tuition increases, and around we go. 

While the argument can be made that all-in-all this was a good thing because it made higher learning accessible to nearly everybody, you can’t ignore the harm it is doing for the students graduating with tens of thousands of dollars in student loan debt. The days where parents could save up for their children’s education or where a student can even “work their way” through college are rapidly leaving and are already gone for many.